A Tax Talk held by the OECD on 4 May 2020 summarised the position on the current tax work in connection with the Covid-19 crisis and on the base erosion and profit shifting (BEPS) project.
Tax measures in the Covid-19 crisis
The Forum on Tax Administration has been looking at issues arising for tax administrations as a result of the Covid-19 crisis. The OECD has issued guidance on permanent establishment issues under tax treaties that arise from situations such as cross-border employees working at home, temporary conclusion of contracts by employees or agents at home; or temporary interruption of a construction site.
A report has been prepared for G20 on tax and fiscal policy in response to the coronavirus crisis.
New transfer pricing issues are arising for taxpayers and tax administrations as a result of the Covid-19 crisis. The Inclusive Framework on BEPS is looking at the possibility of developing guidance on these issues. They are looking for input from stakeholders.
Country by Country Reporting under BEPS Action 13
There is a mandate for a review of the minimum standard by 2020 and a consultation document was issued for comment in February 2020. Around 80 responses have been received from multinational groups, advisers, NGOs and others. A virtual public consultation meeting will be held on 12 and 13 May 2020, focusing on improvements to the minimum standard on country by country (CbC) reporting with the objective of enabling a high level transfer pricing risk assessment, analysis of other BEPS related risks and statistical analysis.
A second phase could later be included to incorporate changes that may be required in support of the continuing work on Pillar One and Pillar Two of the work on taxation of the digital economy. The OECD notes that there are limits on the use of the information in CbC reports owing to considerations such as confidentiality.
Mutual Agreement Procedure – BEPS Action 14
There is to be a review in 2020 of the operation of BEPS action 14 on improving tax dispute resolution mechanisms. Discussions are continuing on the standard, methodology and statistics framework. There could be a public consultation later in the year.
Taxation of the Digital Economy
The aim is to deliver a consensus-based solution on taxation of the digital economy by the deadline at the end of 2020. Working parties are continuing to meet virtually. In July 2020 there is a virtual meeting of the Inclusive Framework at which members will be updated on progress and by the meeting in October 2020 the aim is to reach agreement on key policy features. A consensus-based solution will be delivered to the summit of G20 leaders in November 2020.
The preliminary results of the impact assessment show that Pillars 1 and 2 are expected to lead to substantial net revenue gains globally, with a significant reduction in profit shifting. The OECD is refining the estimates and also looking at an assessment of the impact on investment costs, in addition to an assessment of the consequences if no consensus-based solution is found.
Platform for Collaboration on Tax
The Platform for Collaboration on Tax (PCT) is a partnership between the OECD, UN, IMF and World Bank. The PCT has launched a website giving information on the technical assistance provided by the partners. The PCT will publish the final version of the toolkit on offshore indirect transfers in the near future.
