The OECD has published its report on neutralising branch mismatch arrangements, which is part of its BEPS Action 2.

This report sets out recommendations for changes to domestic laws to prevent the use of hybrid entities to generate multiple deductions for a single expense or deductions without corresponding taxation of the same payment. Specifically, branch mismatches can occur where two jurisdictions take a different view as to the existence of, or the allocation of income or expenditure between, the branch and the head office of the same taxpayer.

From a UK perspective, the recommendations in the report will have a limited impact because the UK has already included permanent establishments in its hybrid mismatch rules.