Learn the difference between BEPS and DEMPE and learn how U.S. companies are responding to the DEMPE standard.
What is the difference between EPS and MP?
Steven Davis: EPS is the initiative. MP is kind of one of the criteria that BEPS put forward right so EPS is kind of like the umbrella lots of different new rules, lots of standards lots of changes all on the under the umbrella EPS. MP is just one example of a change.
How are US companies responding to this?
Steven Davis: Dempsey standard in general, US multinationals have been a bit slow in responding to two EPs and MP specifically what we're seeing of late though is tax authorities in local countries becoming much more aggressive emboldened by this new MP standard and challenging multinationals in terms of the activities that are taking place in local countries. Sometimes, less principled based arguments and more result oriented arguments and so what the tax authorities are doing which really has not taken place in the past is undertaking a very detailed order annular look at companies value chains and looking to see what types of activities are really taking place in the local country. This is forcing US multinationals to respond in undertaking their own very detailed analysis of their value chain to understanding what activities are being performed by what people and in what jurisdictions.
How can companies prepare for different jurisdictions interpreting value chains differently
Steven Davis: Through controversy. This is not a kind of a bright light standard and so every country has its own interpretation about what MP means and what activities generate them and so this is why US multinationals have to be or need to be a bit more thoughtful about how they respond, how they document, how they prepare, how they describe, what's taking place in the local country versus outside the country because different authorities are going to hear different things and you can interpret it differently.