The OECD Secretary-General’s report to the G20 leaders was published on the OECD website on 5 July 2017. The report consists of an international tax update by the Director General and a progress report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Director-General describes 2017 as a year of implementation, referring to the Common Reporting Standard and the recommendations on base erosion and profit shifting (BEPS).
Implementation of tax transparency standards
The three important components of tax transparency, referred to as the objective criteria, are the implementation of the Exchange of Information on Request (EOIR) standard; implementation of the Common Reporting Standard for automatic exchange of information (AEOI); and participation in the multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Global Forum has been monitoring the process of compliance with the standards.
A fast track process was applied to review commitment to the EOIR standard by jurisdictions without at least a “largely compliant” rating and those ratings are presented in the OECD report to the G20. Generally all requested jurisdictions have committed to the AEOI, beginning from September 2018 at the latest. The report notes that 101 jurisdictions are committed to the automatic exchange of financial account information under the common reporting standard.
All the financial centres and a number of developing countries are in the process of signing the multilateral Convention on Mutual Administrative Assistance in Tax Matters. This provides for compulsory exchange of information in request between the parties to the agreement and also permits options automatic exchange of information.
Only six jurisdictions are still considered to be only partially compliance with the EOIR standard. Only one jurisdiction is considered to be non-compliant and continued dialogue is taking place. Work is continuing to implement recommendations of the Global Forum and upgrade the overall ratings of jurisdictions.
The OECD has been working on improving beneficial ownership in the area of tax. This work ties in with the standards of the Financial Action Task Force and the Global Forum on these issues. The OECD is analyzing potential costs and benefits of a common format for searchable data sets of ownership details. The first conclusions of this work are to be reported in early 2018.
Inclusive Framework on BEPS
The Inclusive Framework has 100 member jurisdictions and is working on the global implementation of BEPS. Priorities include monitoring BEPS implementation and technical work on BEPS issues including transfer pricing and taxation of the digital economy. The Multilateral Convention on Tax Treaty Related Measures to Prevent BEPS has been signed by 77 jurisdictions and allows bilateral tax treaties to be quickly updated to include BEPS recommendations.
The report on Tax Certainty issued in March 2017 by the OECD and IMF set out recommendations on measures that could be adopted by countries to increase tax certainty and thereby improve the climate for trade and investment. Discussions are continuing on taxation of the digital economy. An interim report on the issue is to be drawn up by the Inclusive Framework on BEPS in early 2018, with a final report scheduled for 2020.
Tax and development
Improvements in domestic resource mobilization are essential for progress towards sustainable development. Developing countries are participating in the tax agenda through the Inclusive Framework on BEPS and through the Global Forum. Support from the OECD is available to regional and international organizations to improve tax systems in developing countries. Capacity building programs are available through organizations such as Tax Inspectors Without Borders and OECD bilateral programs to tackle BEPS issues and transfer pricing challenges.
The Platform for Collaboration on Tax in which the OECD participates has been developing toolkits to assist developing countries on international tax issues. A draft toolkit on taxing offshore indirect transfers of assets and the final edition of the toolkit on accessing comparables for transfer pricing were issued in June 2017.