On 4 December 2017 the OECD released the first analysis of progress by individual countries on the spontaneous exchange of information on tax rulings. This was one of the recommendations of the final report on action 5 of the project on base erosion and profit shifting (BEPS) released in October 2015. This first annual report on the exchange of information on tax rulings assesses the situation in 44 countries, including all OECD members and G20 countries. The report looks at how they are implementing this new minimum standard under BEPS.
The minimum standard is one of the measures aiming to increase tax transparency and ensure that certain types of tax ruling are promptly exchanged between tax administrations. The tax administrations are required to spontaneously exchange information on tax rulings given to a foreign related party of a resident taxpayer or a permanent establishment where failure to exchange the ruling could give rise to BEPS concerns.
The members of the Inclusive Framework on BEPS have committed to implementing this standard, and have also agreed that their compliance with the standard should be reviewed and monitored by means of peer reviews. Rulings covered by the standard include advance pricing agreements (APAs), rulings relating to permanent establishments, related party conduit rulings and rulings relating to preferential tax regimes.
Also included in the annual report are around fifty country-specific recommendations on issues arising from the application of the standard. These issues include the need to improve the timing of the exchange of information; the need to ensure that all relevant information on related parties is gathered for purposes of the exchange; and ensuring that exchanges of information are made in relation to preferential tax regimes for income from intellectual property.
In the next annual peer review the members of the Inclusive Framework will be covered with exception of the developing countries that requested a deferral of their review until 2019.