In recent years economic substance has become a fundamental
factor driving developments in global finance centres. The global
base erosion and profit shifting (BEPS) movement driven by the OECD
was motivated by a desire to stop multinational corporations,
particularly global technology firms, from artificially structuring
their affairs to avoid corporate tax.
A spillover of all of this, as we are very well aware of now,
was the transportation of the issue across to financial centres,
where frankly it was redundant. However, we did see financial
centres worldwide scrambling to introduce economic substance
legislation – requiring relevant economic activities to be
conducted within the jurisdiction of registration – leading
to some getting caught in the firing line.
