Author Topic: OECD reports on multinational tax issues  (Read 163 times)

John Short

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OECD reports on multinational tax issues
« on: September 16, 2014, 12:25:32 GMT »
First recommendations for a co-ordinated international approach to combat tax avoidance by multinational enterprises
 
Background
 
The BEPS Project aims to provide governments with clear international solutions for fighting corporate tax planning strategies that exploit gaps and loopholes of the current system to artificially shift profits to locations where they are subject to more favourable tax treatment.
 
The OECD work is based on a BEPS Action Plan endorsed by the G20 in July 2013, which identified 15 key areas to be addressed by 2015; with 7 actions to be delivered in September 2014.

Download the reports 
http://www.oecd.org/ctp/beps-2014-deliverables.htm

The first seven elements of the Action Plan focus on helping countries to:
 
- Address the tax challenges of the digital economy (Action 1);
 
- Ensure the coherence of corporate income taxation at the international level, through new model tax and treaty provisions to neutralise hybrid mismatch arrangements (Action 2);

- Counter harmful tax practices (Action 5);

- Realign taxation and relevant substance to restore the intended benefits of international standards and to prevent the abuse of tax treaties (Action 6);

- Assure that transfer pricing outcomes are in line with value creation, through actions to address transfer pricing issues in the key area of intangibles (Action 8 );
 
- Improve transparency for tax administrations and increase certainty and predictability for taxpayers through improved transfer pricing documentation and a template for country-by-country reporting (Action 13); and
 
- Facilitate swift implementation of the BEPS actions through a report on the feasibility of developing a multilateral instrument to amend bilateral tax treaties (Action 15).
« Last Edit: September 16, 2014, 14:43:12 GMT by Napodano »

John Short

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Re: OECD reports on multinational tax issues
« Reply #1 on: September 16, 2014, 18:27:13 GMT »
19/07/2013 - National tax laws have not kept pace with the globalisation of corporations and the digital economy, leaving gaps that can be exploited by multi-national corporations to artificially reduce their taxes.
 
 
 
OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS) offers a global roadmap that will allow governments to collect the tax revenue they need to serve their citizens. It also gives businesses the certainty they need to invest and grow.
 
 
 
Produced at the request of the G20 and introduced at the G20 Finance Ministers’ meeting in Moscow, the Action Plan identifies 15 specific actions that will give governments the domestic and international instruments to prevent corporations from paying little or no taxes.
 
 
 
“This  Action Plan, which we will roll out over the coming two years, marks a turning point in the history of international tax co-operation. It will allow countries to draw up the co-ordinated, comprehensive and transparent standards they need to prevent BEPS,” said OECD Secretary-General Angel Gurría. “International tax rules, many of them dating from the 1920s, ensure that businesses don’t pay taxes in two countries – double taxation. This is laudable, but unfortunately these rules are now being abused to permit  double non-taxation. The Action Plan aims to remedy this, so multinationals also pay their fair share of taxes. (Read the full speech)”
 
 
 
Commenting on the Action Plan, Russian Finance Minister Anton Siluanov said, “As the presidency of the G20, we commend the work of the OECD to ensure that the international tax system promotes growth and competition without distorting the basic tenets of fairness – that it allows multi-national corporations to prosper without loading a higher tax burden on domestic companies and individual tax payers.”
 
 
 
The Action Plan recognises the importance of addressing the digital economy, which offers a borderless world of products and services that too often do not fall within the tax regime of any specific country, leaving  loopholes that allow profits to go untaxed.
 
 
 
The Action Plan will develop a new set of standards to prevent double non-taxation. Closer international co-operation will close gaps that, on paper, allow income to ‘disappear’ for tax purposes by using multiple deductions for the same expense and “treaty-shopping”. Stronger rules on controlled foreign companies would allow countries to tax profits stashed in offshore subsidiaries.
 
 
 
Domestic and international tax rules should relate to both income and the economic activity that generates it. Existing tax treaty and transfer pricing rules can, in some cases, facilitate the separation of taxable profits from the value-creating activities that generate them. The Action Plan will restore the intended effects of these standards by aligning tax with substance – ensuring that taxable profits cannot be artificially shifted, through the transfer of intangibles (eg patents or copyrights), risks or capital,  away from countries where the value is created.
 
 
 
Greater transparency and improved data are needed to evaluate, and stop, the growing disconnect between the location where financial  assets are created and investments take place and where MNEs report profits for tax purposes.   Requiring taxpayers to report their aggressive tax planning arrangements and rules about transfer pricing documentation, breaking-down the information on a country-by-country basis, will help governments identify risk areas and focus their audit strategies. And making dispute resolution mechanisms more effective will provide businesses with greater certainty and predictability.
 
 
 
The actions outlined in the plan will be delivered in the coming 18 to 24 months by the joint OECD/G20 BEPS Project, which involves all OECD members and G20 countries on an equal footing.  To ensure that the actions can be implemented quickly, a multilateral instrument will also be developed for interested countries to amend their existing network of bilateral treaties.
 
 
 
For further information on OECD’s work on tax, please contact  Pascal Saint-Amans, director of OECD’s Centre for Tax Policy and Administration, by e-mail: Pascal.Saint-Amans@oecd.org or by phone: + 331 45 24 91 08.
 
 
 
Further OECD work on Base Erosion and Profit Shifting  is available: http://www.oecd.org/tax/beps.htm

 

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