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OECD Tax Talks
CENTRE FOR TAX POLICY AND ADMINISTRATION
12 July 2016
2:00pm – 3:00pm (CEST)

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Ask questions and comment throughout the webcast
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Join the discussion
Via email CTP.Contact@oecd.org
Via Twitter using #OECDTaxTalks

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Update on:
• The BEPS Project
• G20 Tax Symposium
• Tax Transparency
• … and what’s next
Presented by:
• Pascal Saint-Amans, Director, Centre for Tax Policy and Administration
• Mayra Lucas, Advisor, Transfer Pricing Unit
• Melinda Brown, Advisor, Transfer Pricing Unit
• Achim Pross, Head of International Co-operation and Tax Administration
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Today’s topics and speakers

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The Inclusive Framework on BEPS
Discussion drafts on transfer pricing, profit attribution
and interest deductibility
Latest CBCR guidance
Publication of schema for exchange of tax rulings
Negotiations of the Multilateral Legal Instrument
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BEPS

5.
• First meeting of the Inclusive Framework
– Opening the OECD’s Committee on Fiscal Affairs to committed countries
and jurisdictions on BEPS issues
– 84 members
• All OECD and G20 economies
• 38 new members, including over a dozen African countries.
– 21 countries and jurisdictions participated as BEPS Invitees, including
Jamaica, Malaysia, Mauritius, Panama, and the United Arab Emirates
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OECD/G20 Inclusive Framework
on BEPS Implementation

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• Key outcomes of the meeting
– Steering Group established
– Mandates for peer review of the 4 minimum standards and
monitoring implementation of the BEPS measures
– Approval of discussion drafts
Also, 5 more countries (Argentina, Curaçao, Georgia, Korea, Uruguay)
signed the Multilateral Competent Authority Agreement for the
automatic exchange of CbC reports— 44 signatories in total
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Inclusive Framework

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1. Conforming Changes to Chapter IX of the Transfer Pricing
Guidelines (Actions 8-10)
• Invitation for public review published on 4 July 2016
• Review aimed only at identifying real or perceived inconsistencies
with revised TPG and duplications (i.e. not a re-opening of any
substantive issues)
• Deadline for comments: 16 August 2016
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New BEPS discussion drafts

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2. Attribution of profits to PEs (Action 7)
3. Revised guidance on profit split method (Actions 8-10)
• Released: 4 July 2016
• Deadline: 5 September 2016
• Public consultation: 11-12 October 2016
4. Interest deductibility (Action 4)
• Released: 11 July 2016
• Deadline: 16 August 2016
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New BEPS discussion drafts

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• Work mandated by report on BEPS Action 7
• Illustrate the attribution of profits to PEs
considering the outcomes under BEPS Action 7
and BEPS Actions 8-10
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Discussion draft: Attribution of profits to PEs

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• Examples on how to attribute profits to:
– Dependent agent PEs
– Fixed PEs to which the Article 5(4) exemptions do
not apply
• Possible economic double taxation if Art. 7 and
Art. 9 are not applied coherently
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Discussion draft: Attribution of profits to PEs

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• Most appropriate method should be applied
- No intention to expand or narrow scope of PS
• Two ways to split profits, with different risk outcomes.
Transactional profit splits of:
- actual profits
- anticipated profits
• When is PS likely to be the most appropriate method?
- Unique and valuable contributions
- Highly integrated operations
-  sharing of economically significant risks?
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Discussion draft:
Transactional profit split method

12.
Ongoing transfer pricing work
Hard to Value Intangibles
• Implementation: focus on when and how the HTVI approach
should apply
Low Value-adding Intra-group Services
• Country positions to be announced
Transfer pricing aspects of financial transactions
• Scope is currently being defined
• Economically relevant characteristics for determining arm’s length
conditions for financial transactions
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13.
Discussion draft: Interest deductibility
• Action 4 Report mandated further detailed work on key
elements to assist countries in implementing the rule
• The discussion draft does not propose changes to
anything agreed in the Report
• Group ratio rule allows entities to deduct interest up to
the net interest/EBITDA ratio of worldwide group

14.
Discussion draft: Interest deductibility
1. Calculation of
net third party
interest expense
2. Calculation
of group-
EBITDA
3. Dealing with
the impact of
losses
Discussion draft recommends a
consistent approach based on a
group’s consolidated financial
statements
Some flexibility for countries to take
into account domestic tax law or
policy
Sets out
alternative
approaches to
balance the needs
of groups and
countries

15.
• OECD guidance released on:
– Transitional filing options for MNEs
(“Parent surrogate filing”)
– Application of CbC reporting to investment funds
– Application of CbC reporting to partnerships
– Impact of currency fluctuations on the agreed
EUR 750 million filing threshold
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Update: Country-by-Country Reporting

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• Released standardised IT-format for the exchange on
tax rulings (ETR) between jurisdictions:
– ETR XML Schema, and
– related User Guide
• Help to ensure the swift and efficient implementation of
the BEPS measures
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Tax rulings exchange XML Schema

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Tax Rulings Compulsory Spontaneous
Exchange
1. Rulings related to preferential
regimes
2. Unilateral APAs and other TP rulings
3. Rulings given a unilateral downward
adjustment
4. Permanent establishment (PE)
rulings
5. Related party conduit rulings
6. Other rulings subsequently agreed
to give rise to BEPS concerns
1. Countries of residence of related
parties with a transaction covered
by the ruling, or in the case of PE
ruling country of head office/PE as
case may be
2. Country of Immediate Parent Co
3. Country of Ultimate Parent Co
Categories of rulings To be exchanged with

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Country BCountry A
Country A
Competent Authority Country B
Competent
Authority
Agreement to exchange
information e.g. MAC, DTC
Tax
administration
rulings division
2. Prepares summary in
agreed template including
taxpayer details, related party
details in country B and
summary of issues covered by
ruling
1. Issues ruling to taxpayer
3. Provides information to CA
4. Receives information
and follows confidentiality
safeguards per EOI
agreement; disseminates to
authorised personnel
Tax
administration
risk
assessment
division
5. Reviews information
for risk assessment and
possible compliance
action
XML Schema developed
Tax rulings exchange process

19.
• Discussion draft and public consultation on 7 July
– 33 written comments received
– Diverse group of participants from NGOs and business community
– Focus of input:
• relationship between MLI and existing treaties,
• ensuring consistent application and interpretation
• development of a mandatory binding MAP arbitration provision
• 4th inter-governmental negotiation to take place in September.
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Multilateral Legal Instrument

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G20 Tax Policy
Symposium

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• 23 July 2016 in Chengdu, China
• Ministerial-level
• Two key tax policy topics:
– Tax policy for innovation-driven and inclusive
growth
– Increasing tax certainty to promote trade and
investment in a world where value creation is
changing
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G20 Tax Policy Symposium

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TAX TRANSPARENCY
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Objective Criteria to identify non-cooperative jurisdictions
Publication of CRS Status Message XML Schema

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Three criteria, with benchmarks
1. Implementation of the Exchange of Information on Request Standard (EOIR): at least a
“largely compliant” rating
2. Implementation of the Automatic Exchange of Financial Account Information Standard
(AEOI): committed to implement CRS and begin exchanges by 2018 at the latest.
3. Exchange network: Participation in the Multilateral Convention on Mutual Administrative
Assistance in Tax Matters or a sufficiently broad exchange network that provides for EOIR and
AEOI.
Cooperative: meet the benchmarks of at least 2 criteria.
Immediately non-cooperative: “Non-compliant” jurisdictions or those jurisdictions that are or were
blocked in Phase 1 and have not yet received a rating.
Who will it apply to: all countries and jurisdictions, except developing countries which do not have
financial centres
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Objective Criteria to identify
non-cooperative jurisdictions

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• Released standardised IT-format for providing structured feedback
on exchanged Common Reporting Standard information
– The CRS Status Message XML Schema
– The related User Guide
• First exchanges under the Common Reporting Standard scheduled
for September 2017
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Publication of Schema for feedback on
CRS information

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WHAT’S NEXT?
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26.
• G20 Finance Ministers meeting in July and Leaders
Summit in September
• Upcoming discussion drafts & public consultations
• Next OECD Tax Talks? September
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What’s next?
28 July Discussion draft Interest deductions in the banking and
insurance sectors
Week of 8 August Discussion draft Branch mismatch arrangements
11-12 October Public
consultation
Attribution of profits to permanent
establishments and revised guidance on
profit splits

27.
QUESTIONS?
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