At a multilateral level, the OECD has been busy over the last few weeks on the base erosion and profit shifting front, and on December 23 released new tools for tax administrations to gauge how they are performing in the area of tax debt management and the reduction of compliance burdens.
It announced that it has developed new “maturity models,” featuring performance benchmarks against which tax agencies can better self-assess how their processes are performing against best standards and their peers.
Tom Boelaert, the Administrator General of the Belgian Debt Management Agency, which led the work on this model, explained that: “Tax debt management plays a crucial role in ensuring the effective and fair operation of the tax system. We should therefore always challenge ourselves to do better. Within my own agency, this new maturity model has facilitated frank and in-depth conversations … Read More »
A report compiled by Irish business association, Ibec, has argued that Ireland may be affected significantly by the OECD’s proposals to modify how taxing rights are allocated among countries.
The OECD is developing new digital tax rules that would be presented for adoption internationally at the end of 2020, which will focus on two central pillars.
First, the OECD will review existing rules that divide up among jurisdictions the right to tax the income of multinational enterprises, including traditional transfer pricing rules and the arm’s length principle. It will look at how these can be modified to take into account the changes that digitalization has brought to the world economy. This will require a re-examination of the so-called “nexus” rules – namely how to determine the connection a business has with a given jurisdiction – and the rules that govern how much … Read More »
Thousands of words have been written across countless pages by the OECD to describe, analyze, and consider the tax challenges of the digital economy. Yet it took only a 97-word press release from United States Treasury Secretary to potentially consign them all to the trash can. He might as well have used Twitter.
Of course, Mnuchin’s statement, and the publication by the European Commission of a proposal for an interim digital tax, won’t kill the OECD’s work in this area any time soon.
Nevertheless, these developments tell us pretty much straight away that the OECD will struggle to attain the multilateral consensus that will be required to ensure that any new tax digital measures are workable. Statements issued by various EU member states, and also Switzerland, inform us of that.
While businesses and tax practitioners against this interim measure might hope these schisms might … Read More »
Last August we heard that the OECD’s Global Forum on Transparency and Exchange of Information was moving on to the issue of beneficial ownership of corporate entities in its fight against tax avoidance and evasion, and it certainly appears to be the case that once-reluctant jurisdictions are falling into line with this agenda as the next phase of global transparency boundary-pushing gets under way.
As with BEPS, the United Kingdom has set the pace here, having introduced its register of persons with significant control back in 2016. Now, all European Union member states are obligated to put in place procedures for the collection of beneficial ownership information under the Fourth Anti-Money Laundering Directive. Other countries, including Canada and Indonesia, are doing the same.
It was always thought that it would be difficult for the United States to toe this particular transparency line, … Read More »
It is claimed that the BEPS project is a global initiative, built on a worldwide consensus of OECD and G20 members, and other key economies. That’s true to the extent that these countries are regularly heard to pay lip service to the work of the OECD in all its anti-tax avoidance endeavors. But when you look a little closer, there are stark similarities between the OECD’s work and Europe’s vision of what worldwide corporate taxation should look like. Perhaps this is not surprising, as, after all, the OECD and its 2,500-strong team of technocrats, administrators, and academics are based in Paris. Indeed, Pascal Saint-Amans, one of the main supervisors of the BEPS project, is a former French civil servant. And the fact that 25 of the 34 OECD member countries are in Europe will naturally give much of the OECD’s … Read More »
Apparently, the numerous consultations that the OECD undertook with businesses and other stakeholders as part of the BEPS project generated some 12,000 pages of comment. I do wonder, however, how much of this verbiage the OECD actually took on board when formulating the final BEPS reports, which were announced, in that most modern of ways, via a webcast from OECD HQ in Paris, on October 5.
In reality, the content of the 15 reports, filled as they are with jargon, official-speak and complex tax concepts, is what most of us were expecting. What’s really quite worrying me is that the OECD seems to be utterly in denial that the BEPS recommendations, when (and if) implemented, could do any harm to businesses, investment, and economies. Indeed, I was astonished to hear Saint-Amans admit in his presentation that more double taxation is … Read More »
If the Volkswagen emissions scandal tells us anything, it’s that meeting ambitious emissions reductions targets is proving to be very testing (if you’ll pardon the pun). But governments are not helping themselves by continuing to subsidize fossil fuel usage to the tune of USD200bn annually in the form of tax breaks and spending programs, according to a recent report by the OECD. And this is just the combined total for the 34 OECD members and six key emerging economies. If we are to wean ourselves off our addiction to hydrocarbons, then clearly something very dramatic has to happen, and it has to happen soon, because the current hotchpotch of national energy policies clearly isn’t doing the trick. Something much more joined-up is required, but I don’t envisage that happening any time soon, Kyoto Protocol or no Kyoto Protocol. I don’t … Read More »
It is to South Africa I turn to next. In 2013, the Government set up a committee of tax experts to review the country’s tax system. The overarching aim of this exercise is — in the words of the Government — to “assess our tax policy framework and its role in supporting the objectives of inclusive growth, employment, development, and fiscal sustainability.” It’s a sentence that could have been lifted word-for-word from an OECD report on tax-to-GDP ratios. But it’s actually fairly easy to translate this official-speak: for phrases like “inclusive growth” and “fiscal sustainability,” read “more spending and more tax.” Being the cynic that I am, I suspect that the Government probably set up the Davis Tax Committee, as it has come to be known, in the hope that its conclusions would help to justify its argument for certain … Read More »
…for suggesting that the OECD’s focus with its BEPS project is almost entirely focused on “harmful” tax practices to the point where the beneficial ones have been forgotten about. It sounds – in the spirit of one of John Cleese’s characters again – like stating the bleedin’ obvious, but it’s about time somebody did. Of course, from the OECD’s point of view, I suppose that’s the whole ethos of The Project: the elimination of tax competition. Not that you’ll hear such an admission from the mouth of Angel Gurria or the finance ministers of the OECD governments who regularly praise the work of the OECD without ever seeming to question it. If they ever did stop to think what they are about to unleash on the world, perhaps they might begin to have second thoughts. Then again, politicians generally are … Read More »
If overbearing tax and regulation are still somewhat alien to the American way of life, the same cannot be said for the European Union, where companies and individuals must by now be well used to governments taking what they think is a “fair” share of their income (i.e. over half of it in many instances), and generally interfering in the lives of taxpayers. And so it goes on. The European Commission’s latest wheeze is its corporate tax plan, which it claims would be “a revolutionary step” towards international tax transparency and the fight against base erosion and profit shifting. The gruesome details of the Action Plan won’t be published until summer, but we’ve been warned to expect the controversial plans for a common consolidated corporate tax base to rear their ugly head again. Essentially though, the corporate tax plan is … Read More »