oecd tax talks #5 - 28 march 2017

OECD TAX TALKS

28 March 2017 15:00 – 16:00 (CEST)

C E N T R E F O R TA X P O L I C Y A N D A D M I N I S T R AT I O N

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Topics

1. G20 2. Inclusive Framework on BEPS, including

the Multilateral Instrument 3. Tax transparency 4. Tax certainty 5. VAT/GST

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G20 Finance Ministers Baden-Baden, March 2017 1. “We remain committed to (…) the Base Erosion and

Profit Shifting (BEPS) package (…) 2. We look forward to the OECD's preparation of a list by

the Leaders Summit in July 2017 (…). 3. We acknowledge the report on Tax Certainty submitted

to us (…). We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018 (…).

4. We have undertaken a discussion on the implications of digitalisation for taxation (…). We will further work on this issue through the TFDE and ask for an interim report by the Spring Meetings 2018.”

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UPDATE ON THE INCLUSIVE FRAMEWORK ON BEPS

The Inclusive Framework

25%

21% 54%

94 members

OECD

G20

OTHERS

New Steering Group members: Egypt and Jamaica

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33%

19% 12%

19%

17%

New members – regional balance*

Africa

Asia-Pacific

Eastern Europe-Central Asia

Latin America & Caribbean

Western Europe

*Excluding OECD and G20

Minimum standards: Implementation, implementation, implementation…

Inclusive Framework Activities

Action 5 Counter harmful tax

practices

Action 6 Prevent treaty abuse

Action 13 Country-by-country

reporting

Action 14 Dispute resolution

BEPS Actions Terms of reference / methodology approved Peer review started

2017

2015 (Regimes) Jan. 2017 (Transparency)

Feb. 2017

Dec. 2016

–

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practices



reporting


BEPS Actions Status and first results

• Preferential tax regimes: – More than 90 regimes from 46 jurisdictions under review – Over 10 IP regimes already abolished or made

consistent with the modified nexus approach

• Transparency framework for rulings: – Over 6,000 exchanges on rulings by year-end 2016 – 44 jurisdictions from OECD and G20 currently

undergoing peer reviews


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practices



reporting



• Domestic framework: – Over 45 jurisdictions already have primary and / or secondary legislation in place – EU Directive already approved in 2016

• Exchange of information network: – 57 signatories of the CbC MCAA, more to come – Activations of bilateral relationships underway

• Guidance: – Guidance published in June and December 2016 – More guidance to come – Questions of interpretation and technical issues currently examined to assist

jurisdictions and MNE Groups


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practices



reporting



1st batch By Dec. 2016

2nd batch By March

2017

3rd batch By August

2017

4th batch By Dec. 2017

5th batch By April 2018

6th batch By August

2018

7th batch By Dec. 2018

8th batch By April 2019

Belgium Austria Czech Republic Australia Estonia Argentina Brazil Brunei

Canada France Denmark Ireland Greece Chile Bulgaria Curacao

Netherlands Germany Finland Israel Hungary Colombia China Guernsey

Switzerland Italy Korea Japan Iceland Croatia Hong Kong (China) Isle of Man

United Kingdom Liechtenstein Norway Malta Romania India Indonesia Jersey

United States Luxembourg Poland Mexico Slovak Republic Latvia Papua New

Guinea Monaco

Sweden Singapore New Zealand Slovenia Lithuania Russia San Marino

Spain Portugal Turkey South Africa Saudi Arabia


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practices



reporting



• Publication of batch 1 reports expected in July/August 2017

• On-going peer input • On-going taxpayer input invited from taxpayers and

associations on MAP access, clarity of guidance and timely implementation of MAP agreements

• Unique opportunity – use it or lose it

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MLI status update

• Speed matching 27 February – 2 March: – 55 delegations and 300+ meetings

• Countries are on track: – Countries are working on their reservations and notifications – Secretariat support through MLI workshops and bilateral

assistance • More than 25 intend to opt in for Part VI (Mandatory Binding

Arbitration) • Signing ceremony on 7 June

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Ongoing: Transfer pricing

WP6 in its Inclusive Framework format is working on revised guidance on:

Attribution of profits to PEs. The aim is to:

• Clarify that there is no double taxation issue in source countries • Minimise compliance and administrative burden • Seek further clarification on the interaction between Art. 7 and 9

Use of transactional profit split (TPS) method. The aim is to clarify:

• When is the TPS method the most appropriate method • How can the TPS method be applied in particular circumstances

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In addition, WP6 is working on: • Implementation guidance on the approach to Hard-to-Value Intangibles,

and • Guidance on the transfer pricing of financial transactions

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Public discussion drafts on all projects by mid-2017


OECD Council expected to adopt soon: • Revised Chapter IX; and • Revised 1995 Council Recommendation

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2017

To be included in the 2017 consolidated version of the OECD

TP Guidelines

TAX TRANSPARENCY

G20 listing process (1) “List… of those jurisdictions that have not yet sufficiently progressed towards a satisfactory level of implementation of the agreed international standards on tax transparency”

CRITERIA - At least two of three :

i. At least a “largely compliant” rating with respect to the EOIR Standard;

ii. A commitment to implement the AEOI Standard, with first exchanges in 2018 (with respect to the year 2017) at the latest;

iii. Participation in the multilateral Convention or a sufficiently broad exchange network permitting both EOIR and AEOI.

HOWEVER, even if a jurisdiction meets at least two of the three criteria, it will still be listed if it is “non-compliant” under the Global Forum peer review process, or is blocked from moving past Global Forum Phase 1 or where it is previously blocked from moving past Phase 1 and has not yet received an overall rating under Phase 2.

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G20 listing process (2) A fast-track process is made available by the Global Forum on Tax Transparency and Exchange of Information to jurisdictions at risk of being listed:

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• Will allow the recognition of progress made since the last review ahead of G20 Summit in July 2017;

• Is a simplified but robust review against the 2010 Terms of Reference;

• Will provide a provisional rating for the purpose of the listing process; and

• Will be confirmed by a full peer review against the 2016 Terms of Reference launched by end 2017.

Automatic Exchange of Information

Deadlines 2017/2018 fast approaching

Domestic implementation International implementation

2017 On-track

2018 Domestic reporting

laws to be put in place ASAP where not already done so

MAC: 108 signatories, more to come

CRS MCAA: 87 signatories, more to come

Activated exchange relationships: 1400+ and counting

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Confidentiality is key

• Almost all 100 committed jurisdictions already assessed • Where gaps are identified assistance is provided

Automatic Exchange of Information

• AEOI evaluations are initially following a staged approach looking at key risk areas

• This includes confidentiality standards, domestic reporting legislation and networks of exchange agreements

• Methodology and Terms of Reference under development

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• Standardised and secure transmission system for bilateral exchanges

• CRS, CbC (BEPS Action 13) and Rulings (BEPS Action 5)

• Now moving from build to testing stage • Scheduled to be ready for first exchanges in September 2017 • Open to all Global Forum and Inclusive Framework members

Common Transmission System

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TAX CERTAINTY

Tax certainty • Report on tax certainty1 delivered to G20 Finance

Ministers with IMF (March 2017)

• “We welcome the … work on tax certainty conducted by the OECD and the IMF. We acknowledge the report on Tax Certainty submitted to us and encourage jurisdictions to consider voluntarily the practical tools for enhanced tax certainty as proposed in that report, including with respect to dispute prevention and dispute resolution to be implemented within domestic legal frameworks and international tax treaties.”

• “We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018”

1. www.oecd.org/tax/g20-report-on-tax-certainty.htm 23

http://www.oecd.org/tax/g20-report-on-tax-certainty.htm

• Between 18 October and 16 December 2016

• 724 completed responses

• Firms with global HQ in 62 countries

• Regional HQs in 105 jurisdictions

• Turnover: total of USD 17 trillion

• 99% of turnover in FT Global 500

• 50% are multinational firms

• 66% tax director or senior tax managers

The OECD business survey

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Top 10 sources on uncertainty

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Possible solutions • Multilateral Advance Pricing Agreements

– 36% of respondents say very important and extremely important

– This figure is 44% when we only consider MNEs

• Multilateral audits

– 25% of respondents say very important and extremely important

• Multilateral co-operative compliance programmes

– 31% of respondents say very important and extremely important.

– This figure is 36% when we only consider MNEs

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What’s next?

1. Forum on Tax Administration’s work on co-operative compliance and dispute prevention

2. Implementation of BEPS Action 14 and work on arbitration (with the Multilateral Instrument)

3. Follow-up to report back to the G20 in 2018

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VAT/GST

• Standards for the VAT/GST treatment of international trade

• First “OECD Act” in the area of VAT/GST

• Open to adherence by non-Member countries

• 100+ delegations – Approx. 300 delegates

• Broadening and deepening international consensus on VAT/GST design and operation

The International VAT/GST Guidelines have been adopted as an OECD Recommendation

VAT/GST Recommendation will be released at the Global Forum on VAT in Paris on 12-14 April 2017

VAT/GST Recommendation

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• Flagged as key issue in the context of BEPS Action 1 • 2015 Action 1 Report recommends that offshore sellers should remit VAT/GST in

the consumers’ jurisdiction • Implementation mechanisms: in the VAT/GST Guidelines

• Australia, EU-28, India, New Zealand, Japan, Korea, Norway, Russian Federation, South Africa …

Mechanisms for the collection of VAT/GST on digital “business-to-consumer” sales by offshore vendors

These mechanisms are being implemented globally

Focus now on practical implementation packages

VAT/GST and BEPS Action 1

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WHAT’S NEXT?

Next steps

• Annual report on the Inclusive Framework on BEPS, July 2017

• BEPS Peer Reviews • Global Forum fast track process • First automatic exchanges under CRS • Task Force on the Digital Economy

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QUESTIONS?

Join the discussion

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Ask questions and comment throughout the webcast

[email protected]

#OECDTaxTalks

oecd tax talks #5 - 28 march 2017

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