Additional guidance has continued to roll out from the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Guidance on the implementation of Country-by-Country (CbC) Reporting (Action 13) was updated to address the definition of income, the treatment of MNE groups with a short accounting period, and the treatment of the amount of income tax accrued and income tax paid. Additionally, new guidance was offered regarding the appropriate use of information contained in CbC reports, and addressing a number of issues relating various accounting and reporting issues. The OECD boasts of more than 1,000 automatic exchange relationships that have been established among jurisdictions committed to exchanging CbC Reports by mid-2018.
The OECD also released new IT-tools relating to CbC reporting. The updated CbC XML Schema and User Guide now allows MNE Groups to indicate cases of stateless entities and stateless income, and to specify the commercial name of the MNE Group. A dedicated XML Schema and User Guide was also developed for structured feedback on received CbC information.
In September, the OECD solicited comments on BEPS Action 1 “related to the tax challenges raised by digitalisation and the potential options to address these challenges.” Of note was the submission from the Federation of German Industries, which warned that “the [political] debate about the taxation of the digital economy is currently too much dominated by a one sided perspective on digital business models and the threat they may pose to tax revenue.” A public consultation was subsequently held in November at the University of California, Berkeley, featuring speakers selected from among the commentators. It also released new guidance, “Mechanisms for the Effective Collection of VAT/GST,” related to BEPS Action 1.
A report, “Harmful Tax Practices – 2017 Progress Report on Preferential Regimes,” reviewed 164 “preferential tax regimes” against the BEPS Action 5 standard, finding that 99 required action, with 93 already completed or under way. And the first six peer review – for Belgium, Canada, the Netherlands, Switzerland, the United Kingdom, and the United States – on individual country efforts on dispute resolution mechanisms (Action 14) were released.
A regional meeting of the Inclusive Framework on BEPS for Eastern Europe and Central Asia was held in Bratislava in October. It featured 80 delegates from 20 countries and 11 organizations. Among other discussions, participants at the meeting raised concerns regarding the overlap with the EU directive on dispute resolution and BEPS Action 14, and business representatives emphasized the importance of preserving the confidentiality of taxpayer data.
The 11th meeting of the Forum on Tax Administration, bringing together more than 180 delegates, including 48 tax administrations from OECD and G20 countries, was held in Oslo, Norway in September. The meeting featured the release of “Tax Administration 2017,” an international survey on tax systems and their administration. It noted a “significant change that is taking place in tax administrations, with both internal and external drivers at work,” including “an increased focus on the security of taxpayer information and data.” The statement of outcomes from the meeting offered the usual praise for BEPS, CRS, and various other tax-grabbing initiatives.
The TIWB Experts Round Table & Stakeholders Workshop was held in Paris to “share experiences and identify best practices in the implementation of Tax Inspectors Without Borders (TIWB)” programs. The initiative flies in outside auditors to assist developing countries in their confiscation efforts, or as the OECD puts it, “to strengthen domestic resources mobilization.” It boasted of 27 programs under way in 23 countries, with seven so far in the pipeline for 2018.
The Fifth OECD Forum on Tax and Crime was held in London in November. The Forum produced a five-point action plan: “1. Focus on targeted responses to professional enablers. 2. Increase inter-agency co-operation across governments to partner in the fight against financial crime. 3. See the full picture – implement the Ten Global Principles necessary for fighting tax crime. 4. Improve international co-operation amongst agencies fighting tax crimes. 5. Strengthen capacity building for all to effectively combat financial crimes.”
The 10th meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes was held in Cameroon. It published peer reviews for Curaçao, Denmark, India, Isle of Man, Italy, and Jersey, and adopted the first report on the status of implementation of the AEOI Standard.
Economic Surveys were released for Slovenia, France, Estonia, Latvia, and the United Kingdom. The OECD participated in the UN Climate Change Conference, COP23, to help agitate for carbon taxes, so it should come as no surprise that higher taxes on energy were called for in Estonia, Latvia, and France. Though even the OECD has limits, as France was also encouraged to continue seeking to lower its tax burden and overall spending. Overall, the recommendations typically favored expansion of government programs, or pushed nations to “make full use of available fiscal space” with a willingness to run deficits if existing debt was low.
The Global Forum on Transparency and Exchange of Information for Tax Purposes added Greenland, Cambodia, Madagascar, and Haiti as members, bringing the total to 146 jurisdictions. Brunei Darussalam, Peru, and Qatar signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which now includes 115 jurisdictions. Trinidad and Tobago became the 108th jurisdiction to join the Inclusive Framework on BEPS. Forty-nine jurisdictions began automatically exchanging information as part of the Common Reporting Standard approved in 2014. Another 53 jurisdictions will begin exchanges in September 2018. The OECD boasts of 2,000 bilateral agreements for the automatic exchange of CRS information.
The OECD published the second annual edition of “Tax Policy Reforms: OECD and Selected Partner Economies,” covering “tax reforms that were implemented, legislated or announced in 2016.” The accompanying editorial by OECD Secretary-General Angel Gurría provides yet more evidence of the organization’s shifting priorities away from economic coordination and toward a more ideological agenda.
Gurría asserts that “progressive taxation is central to income redistribution and can help reduce wealth inequalities,” and that “tax reforms that contribute to strengthening progressivity and redistribution will play a key role in addressing today’s high levels of income and wealth inequality between those who have benefited from growth and those who have not.” He also revived the OECD’s decades-long and deeply misguided war on tax competition by worrying that “an increase in corporate tax rate competition … raises challenging questions for governments seeking to strike the right balance between maintaining a competitive tax system and ensuring they continue to raise the revenues necessary to fund vital public services, social programmes and infrastructure.”