Business structures and the process of value creation have evolved in part through the digitalization of the global economy. Such evolution has posed broad tax challenges which the Organization for Economic Cooperation and Development (OECD) is currently evaluating. To aid in the assessment of certain financial reporting implications, we summarize below key considerations from the OECD documents, as well as certain unilateral developments from various countries.
The digital proposals will likely result in significant changes. Some countries are moving forward with their own proposals - which can be effective on a retroactive basis as early as January 2019. Given the various digital tax proposals, accounting for the new provisions will be accompanied by challenges. As it is expected that the OECD proposals could impact all businesses, not just those that are ‘highly digitalized’ companies should ensure they are monitoring developments so they are prepared to account for them in the appropriate financial statement period. In addition, companies should begin to assess the resulting financial statement impacts, as well as impacts to financial reporting systems and processes, such that they are prepared as measures are implemented and to ensure that appropriate disclosures are made.
US Tax Accounting Market Leader, PwC US