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OECD Tax Talks #5 - 28 March 2017

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With a number of important recent and upcoming developments in the OECD's international tax work, we invite you to join the OECD's Centre for Tax Policy and Administration (CTPA) for the latest tax update. Topics include:
1. G20
2. Inclusive Framework on BEPS, including the Multilateral Instrument
3. Tax transparency
4. Tax certainty
5. VAT/GST

Published in: Government & Nonprofit
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OECD Tax Talks #5 - 28 March 2017

  1. 1. OECD TAX TALKS 28 March 2017 15:00 – 16:00 (CEST) CENTRE FOR TAX POLICY AND ADMINISTRATION
  2. 2. Join the discussion Ask questions and comment throughout the webcast CTP.Contact@oecd.org #OECDTaxTalks 2
  3. 3. Topics 1. G20 2. Inclusive Framework on BEPS, including the Multilateral Instrument 3. Tax transparency 4. Tax certainty 5. VAT/GST 3
  4. 4. G20 Finance Ministers Baden-Baden, March 2017 1. “We remain committed to (…) the Base Erosion and Profit Shifting (BEPS) package (…) 2. We look forward to the OECD's preparation of a list by the Leaders Summit in July 2017 (…). 3. We acknowledge the report on Tax Certainty submitted to us (…). We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018 (…). 4. We have undertaken a discussion on the implications of digitalisation for taxation (…). We will further work on this issue through the TFDE and ask for an interim report by the Spring Meetings 2018.” 4
  5. 5. UPDATE ON THE INCLUSIVE FRAMEWORK ON BEPS
  6. 6. The Inclusive Framework 25% 21% 54% 94 members OECD G20 OTHERS New Steering Group members: Egypt and Jamaica 6 33% 19%12% 19% 17% New members – regional balance* Africa Asia-Pacific Eastern Europe- Central Asia Latin America & Caribbean Western Europe *Excluding OECD and G20
  7. 7. Minimum standards: Implementation, implementation, implementation… Inclusive Framework Activities Action 5 Counter harmful tax practices Action 6 Prevent treaty abuse Action 13 Country-by-country reporting Action 14 Dispute resolution BEPS Actions Terms of reference / methodology approved Peer review started  2017    2015 (Regimes) Jan. 2017 (Transparency)  Feb. 2017  Dec. 2016 – 7
  8. 8. Action 5 Counter harmful tax practices Action 6 Prevent treaty abuse Action 13 Country-by-country reporting Action 14 Dispute resolution BEPS Actions Status and first results • Preferential tax regimes: – More than 90 regimes from 46 jurisdictions under review – Over 10 IP regimes already abolished or made consistent with the modified nexus approach • Transparency framework for rulings: – Over 6,000 exchanges on rulings by year-end 2016 – 44 jurisdictions from OECD and G20 currently undergoing peer reviews Inclusive Framework Activities 8
  9. 9. Action 5 Counter harmful tax practices Action 6 Prevent treaty abuse Action 13 Country-by-country reporting Action 14 Dispute resolution BEPS Actions Status and first results • Domestic framework: – Over 45 jurisdictions already have primary and / or secondary legislation in place – EU Directive already approved in 2016 • Exchange of information network: – 57 signatories of the CbC MCAA, more to come – Activations of bilateral relationships underway • Guidance: – Guidance published in June and December 2016 – More guidance to come – Questions of interpretation and technical issues currently examined to assist jurisdictions and MNE Groups Inclusive Framework Activities 9
  10. 10. Action 5 Counter harmful tax practices Action 6 Prevent treaty abuse Action 13 Country-by-country reporting Action 14 Dispute resolution BEPS Actions Status and first results 1st batch By Dec. 2016 2nd batch By March 2017 3rd batch By August 2017 4th batch By Dec. 2017 5th batch By April 2018 6th batch By August 2018 7th batch By Dec. 2018 8th batch By April 2019 Belgium Austria Czech Republic Australia Estonia Argentina Brazil Brunei Canada France Denmark Ireland Greece Chile Bulgaria Curacao Netherlands Germany Finland Israel Hungary Colombia China Guernsey Switzerland Italy Korea Japan Iceland Croatia Hong Kong (China) Isle of Man United Kingdom Liechtenstein Norway Malta Romania India Indonesia Jersey United States Luxembourg Poland Mexico Slovak Republic Latvia Papua New Guinea Monaco Sweden Singapore New Zealand Slovenia Lithuania Russia San Marino Spain Portugal Turkey South Africa Saudi Arabia Inclusive Framework Activities 10
  11. 11. Inclusive Framework Activities Action 5 Counter harmful tax practices Action 6 Prevent treaty abuse Action 13 Country-by-country reporting Action 14 Dispute resolution BEPS Actions Status and first results • Publication of batch 1 reports expected in July/August 2017 • On-going peer input • On-going taxpayer input invited from taxpayers and associations on MAP access, clarity of guidance and timely implementation of MAP agreements • Unique opportunity – use it or lose it 11
  12. 12. MLI status update • Speed matching 27 February – 2 March: – 55 delegations and 300+ meetings • Countries are on track: – Countries are working on their reservations and notifications – Secretariat support through MLI workshops and bilateral assistance • More than 25 intend to opt in for Part VI (Mandatory Binding Arbitration) • Signing ceremony on 7 June 12
  13. 13. Ongoing: Transfer pricing WP6 in its Inclusive Framework format is working on revised guidance on: Attribution of profits to PEs. The aim is to: • Clarify that there is no double taxation issue in source countries • Minimise compliance and administrative burden • Seek further clarification on the interaction between Art. 7 and 9 Use of transactional profit split (TPS) method. The aim is to clarify: • When is the TPS method the most appropriate method • How can the TPS method be applied in particular circumstances 13
  14. 14. Ongoing: Transfer pricing In addition, WP6 is working on: • Implementation guidance on the approach to Hard-to-Value Intangibles, and • Guidance on the transfer pricing of financial transactions 14 Public discussion drafts on all projects by mid-2017
  15. 15. Ongoing: Transfer pricing OECD Council expected to adopt soon: • Revised Chapter IX; and • Revised 1995 Council Recommendation 15 2017 To be included in the 2017 consolidated version of the OECD TP Guidelines
  16. 16. TAX TRANSPARENCY
  17. 17. G20 listing process (1) “List… of those jurisdictions that have not yet sufficiently progressed towards a satisfactory level of implementation of the agreed international standards on tax transparency” CRITERIA - At least two of three : i. At least a “largely compliant” rating with respect to the EOIR Standard; ii. A commitment to implement the AEOI Standard, with first exchanges in 2018 (with respect to the year 2017) at the latest; iii. Participation in the multilateral Convention or a sufficiently broad exchange network permitting both EOIR and AEOI. HOWEVER, even if a jurisdiction meets at least two of the three criteria, it will still be listed if it is “non-compliant” under the Global Forum peer review process, or is blocked from moving past Global Forum Phase 1 or where it is previously blocked from moving past Phase 1 and has not yet received an overall rating under Phase 2. 17
  18. 18. G20 listing process (2) A fast-track process is made available by the Global Forum on Tax Transparency and Exchange of Information to jurisdictions at risk of being listed: 18 • Will allow the recognition of progress made since the last review ahead of G20 Summit in July 2017; • Is a simplified but robust review against the 2010 Terms of Reference; • Will provide a provisional rating for the purpose of the listing process; and • Will be confirmed by a full peer review against the 2016 Terms of Reference launched by end 2017.
  19. 19. Automatic Exchange of Information Deadlines 2017/2018 fast approaching Domestic implementation International implementation 2017 On-track 2018 Domestic reporting laws to be put in place ASAP where not already done so MAC: 108 signatories, more to come CRS MCAA: 87 signatories, more to come Activated exchange relationships: 1400+ and counting 19   Confidentiality is key • Almost all 100 committed jurisdictions already assessed • Where gaps are identified assistance is provided
  20. 20. Automatic Exchange of Information • AEOI evaluations are initially following a staged approach looking at key risk areas • This includes confidentiality standards, domestic reporting legislation and networks of exchange agreements • Methodology and Terms of Reference under development 20
  21. 21. • Standardised and secure transmission system for bilateral exchanges • CRS, CbC (BEPS Action 13) and Rulings (BEPS Action 5) • Now moving from build to testing stage • Scheduled to be ready for first exchanges in September 2017 • Open to all Global Forum and Inclusive Framework members Common Transmission System 21
  22. 22. TAX CERTAINTY
  23. 23. Tax certainty • Report on tax certainty1 delivered to G20 Finance Ministers with IMF (March 2017) • “We welcome the … work on tax certainty conducted by the OECD and the IMF. We acknowledge the report on Tax Certainty submitted to us and encourage jurisdictions to consider voluntarily the practical tools for enhanced tax certainty as proposed in that report, including with respect to dispute prevention and dispute resolution to be implemented within domestic legal frameworks and international tax treaties.” • “We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018” 1. www.oecd.org/tax/g20-report-on-tax-certainty.htm 23
  24. 24. • Between 18 October and 16 December 2016 • 724 completed responses • Firms with global HQ in 62 countries • Regional HQs in 105 jurisdictions • Turnover: total of USD 17 trillion • 99% of turnover in FT Global 500 • 50% are multinational firms • 66% tax director or senior tax managers The OECD business survey 24
  25. 25. Top 10 sources on uncertainty 25
  26. 26. Possible solutions • Multilateral Advance Pricing Agreements – 36% of respondents say very important and extremely important – This figure is 44% when we only consider MNEs • Multilateral audits – 25% of respondents say very important and extremely important • Multilateral co-operative compliance programmes – 31% of respondents say very important and extremely important. – This figure is 36% when we only consider MNEs 26
  27. 27. What’s next? 1. Forum on Tax Administration’s work on co-operative compliance and dispute prevention 2. Implementation of BEPS Action 14 and work on arbitration (with the Multilateral Instrument) 3. Follow-up to report back to the G20 in 2018 27
  28. 28. VAT/GST
  29. 29. • Standards for the VAT/GST treatment of international trade • First “OECD Act” in the area of VAT/GST • Open to adherence by non-Member countries • 100+ delegations – Approx. 300 delegates • Broadening and deepening international consensus on VAT/GST design and operation The International VAT/GST Guidelines have been adopted as an OECD Recommendation VAT/GST Recommendation will be released at the Global Forum on VAT in Paris on 12-14 April 2017 VAT/GST Recommendation 29
  30. 30. • Flagged as key issue in the context of BEPS Action 1 • 2015 Action 1 Report recommends that offshore sellers should remit VAT/GST in the consumers’ jurisdiction • Implementation mechanisms: in the VAT/GST Guidelines • Australia, EU-28, India, New Zealand, Japan, Korea, Norway, Russian Federation, South Africa … Mechanisms for the collection of VAT/GST on digital “business-to-consumer” sales by offshore vendors These mechanisms are being implemented globally Focus now on practical implementation packages VAT/GST and BEPS Action 1 30
  31. 31. WHAT’S NEXT?
  32. 32. Next steps • Annual report on the Inclusive Framework on BEPS, July 2017 • BEPS Peer Reviews • Global Forum fast track process • First automatic exchanges under CRS • Task Force on the Digital Economy 32
  33. 33. QUESTIONS?
  34. 34. Join the discussion 34 Ask questions and comment throughout the webcast CTP.Contact@oecd.org #OECDTaxTalks

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