The road ahead for the BEPS project


This concluding video gives a perspective of where the BEPS project is headed and what steps are required to implement this project. The speakers also discuss the likely changes that the Indian government may bring to implement the BEPS project in keeping with the overall objective of 'ease of doing business in India' and finally, what it means for MNCs doing business in India.

A journey towards substance


Transfer pricing rules have never been as high on the political agenda as they are today. Given the growth in the volume and value of intra-group trade, transfer pricing rules can be misapplied so that they result in outcomes in which the allocation of profits is not aligned with the economic activity that created the profits. 

The work under Actions 8-10 of the BEPS Action Plan has targeted this issue to ensure that transfer pricing outcomes are aligned with value creation and the operational profits are allocated to the economic activities which generate them.

BEPS on Substance and Transparency


BEPS Report on Action Plan 5 focusses on the concern of preferential tax regimes that risk being used for artificial profit shifting. The report seeks to address the concern through suggesting the methodology for ‘substantial activity requirement’ separately for IP and other regimes and also improving the transparency through compulsory spontaneous exchange of certain rulings.

From an impact standpoint, it needs to be seen, how the OECD guidance on substance requirements and transparency is locally adopted and implemented by various countries. However, it certainly is a call to companies with cross-border multi-tier structures to review their structures in the backdrop of the ‘substantial activity requirements’ laid down by OECD.

Value creation through intangibles


The OECD final report on BEPS in relation to value creation through intangibles requires that a taxpayer would benefit from IP regime only to the extent the taxpayer itself has incurred the R&D expenditure that gives rise to IP income. This will require changes in business models, significant people functions, etc. to be performed in the country providing tax benefits. This will necessitate the tax payer to review the existing IP structures and evaluate the overall tax impact in the case of a change in the structures/regimes under which it is currently operating.

Prevention of treaty abuse


Treaty abuse, and in particular treaty shopping, was one of the main concerns of the BEPS project. Treaty shopping refers to the case when a taxpayer claims a tax treaty benefit when they are not really entitled to. Anti-abuse provisions have therefore been agreed upon by countries to be introduced in their tax treaties.

Making cross-border dispute resolution mechanisms effective


Disputes could bring with them costs and potential reputation risk. Thus, in the BEPS world, it is vital to make cross-border dispute resolution mechanisms effective. In line with OECD’s guidance, apart from the continuing political will, India could certainly do with some suitable modifications to treaty provisions, especially the inclusion of Article 9(2) in all treaties and gearing up for bilateral APAs.

The new TP documentation requirements - How will you manage your reporting burden?


Taxpayers need to prepare their organizations and reporting systems to meet the significant obligations of the revised TP documentation and country-by-country reporting requirements under Action 13 of the BEPS project.  Taxpayers also need to align this with the POEM concept introduced in the domestic tax law in 2015. The wider transparency that will result from these requirements is one of the most significant impact of BEPS that taxpayers will need to address in the coming months.

Cyber Warriors: A PwC India cyber security game

Sivarama Krishnan, Leader, Cyber Security, PwC India

New-age attacks are handcrafted, state-motivated and driven by innovation, to bypass the typical standards of cyber defence. But is this constant change considered adequately to influence an organisation’s decision? What would it take for an organisation to shoulder the responsibility of combatting attacks?

The organisation needs to understand that there is no silver bullet for neutralising a cyberattack, since a successful strike comprises multiple threat vectors. There is also a limit to the resources (people, processes and technology) that can be spared for preventing attacks; even the portfolio for an attacker is wide open and so are the complementary defence solutions. In a catastrophic situation, the response time for the organisation to think and react is even more reduced. All these factors adversely affect the revenue of the company and lead to a loss of customers. This is, indeed, a cyber maze that needs to be navigated.

But how?

Experience the cyber maze through gamification

PwC presents Cyber Warriors, asimulation of key decision-making parameters to realise the concept of cyber security by helping the players learn about core cyber defence solutions and exposing them to the arsenal of new-age cyber weapons.

Explore how your decisions impact revenue and customer confidence in real time, through gameplay, in the event of a cyberattack. Gamification reflects the use of game thinking, including game progress mechanics, player avatar control, rewards, penalties, collaborative problem-solving and competition, when in a non-game situation. This can be used to enhance security awareness, and the results are tightly connected to the real world.

Cyber Warriors: Key objectives

  • Recognise the reputational, customer and financial impacts of cyber threats in a simulated environment

  • Simulate effective use of company resources (costs incurred) to contain attacks, with around 2,000 scenarios that demonstrate the impact of attacks and effectiveness of potential defence solutions, thereby creating a situational awareness of cyber security

  • Understand and build awareness of the right amount, priority and kind of investments in cyber security to protect company assets

  • Assess how to anticipate and proactively manage risks to business objectives, and improve the company’s security posture

The gameplay

The business impact of a cyberattack is a pivotal decision-making attribute for board members, and in this context, Cyber Warriors becomes a tool for the board. The game runs in proactive and reactive modes of defence, combatting breach, compromise and attack. Based upon a real-time threat scenario, the defender is given an option to mitigate the attack and protect the organisation.

The two game roles are ‘attacker’ and ‘defender’. The defender makes effective use of firm resources (people, processes and technological solutions), while the attacker strikes, compromises and breaches security using the information and resources supplied to him. The game relates the impacts of an attack in terms of revenue, customer confidence, time elapsed, costs incurred, resources bought and symptoms of the attack, and also shows the effects of the solutions deployed by the organisation (defender) in the common zone, known as the War Zone. The side that makes the maximum impact as calculated based on these parameters is the winner.

With this objective, the gameplay takes the firm through many cyberattack simulations, so the organisation can choose the optimum solution for defence and realise the return on investments. A game recap provides detailed analysis of the attack vis-à-vis the solution map, cost details, revenue change map, customer confidence map and the return on investment.

Ashish Bhugra, Manager, Cyber Security, contributed to this article, with inputs from Aditya Jain, Consultant, Cyber Security and Sarvesh Jha, Sr. Analyst, Cyber Security. For more information on our Cyber Security services, write to

Decoding tax aggressive strategies


This action plan specifies disclosure rules to address the challenges faced by the tax authorities due to a lack of timely and comprehensive information on aggressive tax planning strategies.

Schemes and items to be reported should be clearly prescribed giving illustrations.
Higher level of maturity in tax functions of both tax payers and the revenue authorities is needed to mitigate the risk of damage to reputation of tax payers and to provide a conducive investment environment.

Tax payers - final call to reset your PE status


Tax payers were held to believe a PE was created only in certain circumstances given specific conditions in the treaty for agency activities, presence within a permitted threshold period, activities being considered auxiliary/preparatory, etc. This may however need a re-look and would now require a more holistic evaluation of business activities, which create a PE.

The opinions expressed in the blogs are personal.


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