The OECD Tax Talk on 4 March 2021 provided updates on important areas of OECD tax work.
Taxation of the Digital Economy
Countries have recognised the need to further simplify the proposals in Pillar One of the taxation of the digital economy and are continuing to work on the proposals. The G20 Finance Ministers are to be updated on progress with the work on 7 April 2021 and the OECD intends to present proposals on taxation of the digital economy to the meeting of the G20 Finance Ministers scheduled for 9 July 2021. The aim is to reach agreement before the G20 Finance Ministers’ meeting scheduled for 9 July 2021.
The US is withdrawing the so-called “safe harbour” proposal and is continuing to look for an international approach to taxation of the digital economy.
BEPS developments
The OECD reported the continuing progress in relation to the minimum standards under the project on base erosion and profit shifting (BEPS). Further countries have signed the multilateral instrument (MLI) to include tax treaty related BEPS recommendations into their bilateral tax treaties. In relation to the minimum standard under Action 13. A total of 90 countries have now introduced country by country (CbC) reporting. Progress is also reported in relation to the minimum standard on improving dispute resolution mechanisms.
ICAP
The International Compliance Assurance Programme (ICAP) has now gone from initial pilot programmes to a permanent programme. ICAP is a voluntary risk assessment and assurance programme promoting greater cooperation between multinational enterprises and tax administrations. On 18 February 2021 the International Compliance Assurance Programme Handbook was issued as guidance for tax administrations and multinational groups. A list of participating tax administrations is to be published in March 2021 and interactive information sessions will be held on 30 March and 1 April 2021. The next application deadline for taxpayers is 30 September 2021.
Taxation of Crypto Assets
A report has been issued on Taxing Virtual Currencies: Tax Treatments and Emerging Policy Issues. The report looks at existing approaches and key policy gaps across the main categories of taxes with regard to crypto assets. Work continues on improving transparency in this area of tax.
Tackling Professional Enablers of Tax Crimes
A report published on 25 February 2021 highlights the role of professional intermediaries enabling tax evasion and other financial crimes for their clients. It recommends strategies for deterring, investigating and prosecuting the professional enablers. Enablers may include operators on the dark web, lawyers, accountants or other professionals. They set up companies, trust or offshore business structures to obscure beneficial ownership, hide clients’ money from tax authorities and falsify documentation.
Strategies to counter professional enablers include increasing skills and awareness, effective legislation, disruption strategies, international cooperation and effective implementation. Governments must ensure a multidisciplinary strategy and cooperate at national and international levels. Each country should appoint a lead person or agency to oversee the strategy.
