On 15 December 2017 the OECD gave an online Tax Talk to summarize the progress made on the various ongoing tax initiatives.
Harmful Tax Practices
Peer review reports on the exchange of tax rulings were published in December 2017. More than 10,000 rulings had been identified up to the end of 2016 and of these over 6,500 had been exchanged.
International Compliance and Assurance Programme (ICAP)
This is a voluntary programme for multilateral cooperative risk assessment and assurance which aims to provide increased tax certainty for multinational groups as well as giving assurance to tax administrations that any tax risks have been identified. The benefits of this will be more effective use of information; more efficient use of resources; more tax certainty and fewer disputes going to the mutual agreement procedure. A pilot project is to commence in January 2018 with eight participating tax administrations and headquarters of multinational enterprises in their countries. The participating countries are Australia, Canada, Italy, Japan, Netherlands, Spain, UK and US.
The pilot will run for 18 months and focus on transfer pricing and permanent establishment risk. Lessons learnt from the pilot may then be incorporated into a wider project later.
Tax Challenges of the Digital Economy
In September 2017 the OECD issued a request for input on tax challenges of the digital economy, and a public consultation was held on 1 November 2017. Respondents acknowledged that VAT rules now being implemented are raising real revenue. Some businesses pointed out how multinationals have restructured in the face of the BEPS measures. The majority of respondents suggested long term solutions are preferable to interim measures and it is important to avoid ring-fencing of the digital economy as there would be potential for distortion of trade and double taxation.
The interim report to the G20 will analysis business models; assess the impact of measures and overview of key measures already taken; establish the direction for action on long term solutions; consider advantages and disadvantages of interim measures; look at how digitalization can help to improve tax compliance; and set out a roadmap for future work.
The next steps include a meeting of the Inclusive Framework on BEPS in January 2018; a meeting of the Task Force on the Digital Economy in March 2018; and the presentation of an interim report to the G20 finance ministers.
OECD Model Tax Convention
The 2017 update of the OECD Model Tax Convention was adopted by the OECD Council on 21 November and the PDF version is being published on the OECD’s website. The print version of the treaty is to be available by 19 January 2018.
Mutual Agreement Procedure (MAP)
Batches 1 and 2 of the peer reviews on dispute resolution (containing 6 and 7 countries respectively) have been published. The third batch of reviews is on the way and will be published early in 2018. Batch 4 is to be launched on 29 December 2017 and taxpayer input on these has been requested by 22 December 2017.
CRS Avoidance and Offshore Structures
The Bari Declaration of May 2017 called for the OECD to look for ways to deal with common reporting standard (CRS) avoidance arrangements and offshore structures, including consideration of a model disclosure regime (MDR) along the lines of the approach in the BEPS action 12 report.
The OECD’s consultation document deals with the type of schemes to be disclosed; the persons who are required to disclose the schemes; the time that disclosure is required; the information to be disclosed and the jurisdiction where disclosure must be made. In some cases the user rather than the intermediary would be required to disclose. Relevant information would be exchanged between tax administrations. Comments on the consultation document are invited by 15 January 2018.
