On 13 December 2023 the OECD released the 2022 Peer Review Reports on the Exchange of Information on Tax Rulings. The latest annual peer review reports cover 131 Inclusive Framework member jurisdictions and jurisdictions of relevance.
The BEPS Action 5 minimum standard on the compulsory spontaneous exchange of information on tax rulings, known as the “transparency framework, is concerned with providing tax administrations with information on rulings given to a foreign related party of a resident taxpayer or to a permanent establishment. The information can be used in conducting risk assessments.
The transparency framework requires spontaneous exchange of information on rulings related to certain preferential regimes; on unilateral advance pricing arrangements or other cross-border unilateral rulings relating to transfer pricing; rulings providing for a downward adjustment of taxable profits; permanent establishment (PE) rulings; and related party conduit rulings. The exchanges are provided for in international exchange of information agreements, which set out conditions such as a requirement for taxpayer confidentiality.
Of the 131 jurisdictions covered by the latest report, there were 27 jurisdictions which were not able to legally, or in practice, issue rulings in scope of the transparency framework, and therefore no separate peer review report were included for these jurisdictions. Also, some countries of the Inclusive Framework were not assessed under the transparency framework because they did not impose any corporate income tax during the year under review. They therefore cannot legally issue rulings within the scope of the transparency framework or exchange information on rulings with the Inclusive Framework members exchange information on rulings with them.
The reviews included in the annual report cover the steps jurisdictions have taken to implement the transparency framework during the calendar year 2022. The reviews have been prepared using information from each reviewed jurisdiction, input from peers who received exchanges of information, and input from the delegates of the Forum on Harmful Tax Practices (FHTP).
The report notes that at 31 December 2022 a cumulative amount of more than 24,000 tax rulings, within the scope of the transparency framework, had been issued by the jurisdictions under review. In the year 2022 more than 1,800 tax rulings in scope of the transparency framework were issued by the 131 jurisdictions included in the review. By 31 December 2022 more than 54,000 exchanges of information had taken place, of which around 5,000 exchanges were carried out in 2022 and another 5,000 exchanges in the previous year.
The report notes that around 100 jurisdictions were found to have met all the terms of reference, and a further seven jurisdictions were given just one recommendation for improvement of their arrangements. In total, 58 recommendations for improvement were made for the year reviewed. Member countries of the OECD’s Inclusive Framework submitted 115 peer input questionnaires with feedback on the conduct of their exchanges of information. In cases where peer input was provided it allowed a number of jurisdictions to revise their procedures and improve the quality of information exchanged.
Also, in a number of cases the peer review process has helped countries to identify areas where improvement is required. Jurisdictions were able to take action to implement changes while the peer review was still ongoing. Changes that were implemented in 2023 are generally not taken into account in the recommendations for the year 2022, but will be examined in future peer reviews.
