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The Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) published today eight new peer review reports assessing compliance with the international standard on transparency and exchange of information on request (EOIR).
The COVID-19 pandemic has forced governments to take strict and in some cases unprecedented measures to protect their citizens, economies and societies, such as restricting or stopping travel and implementing strict quarantine requirements. In this difficult context, most countries are putting stimulus packages in place, including measures to support employment, for example, taking on the burden of unpaid salaries on behalf of companies suffering from the economic downturn resulting from the COVID-19 pandemic. As a result of these restrictions, many cross-border workers are unable to physically perform their duties in their country of employment. They may have to stay at home and telework, or may be laid off because of the exceptional economic circumstances.
OECD/G20 Base Erosion and Profit Shifting Project. Prevention of Treaty Abuse – Second Peer Review Report on Treaty Shopping. INCLUSIVE FRAMEWORK ON BEPS: ACTION 6. Action 6 of the BEPS Project identified treaty abuse, and in particular treaty shopping, as one of the principal sources of BEPS concerns. Owing to the seriousness of treaty shopping, jurisdictions have agreed to adopt, as a minimum standard, measures to address it, and to subject their efforts to an annual peer review. In 2018, the first peer review concluded that although few of the reported agreements met the minimum standard, many jurisdictions had begun in earnest to tackle the problem, principally by signing the multilateral instrument (MLI). This second peer review reveals that, by 30 June 2019, 91 Inclusive Framework members had begun to update the ir bilateral treaty network and were implementing the minimum standard. The data compiled for this peer review demonstrate that the MLI has been the tool used by the vast majority of jurisdictions that have begun to implement the minimum standard. By 30 June 2019, the MLI had already modified around 60 bilateral agreements. The MLI’s impact was expected to increase quickly as jurisdictions ratified it and that number has, as of 1 January 2020, increased to 180 bilateral agreements. Further, the MLI’s cover age is also expected to increase as other jurisdictions with a large network of tax treaties are considering joining it. The success of the MLI as a tool to implement Action 6 minimum standard is clear: by 1 January 2020, 93 jurisdictions had signed the MLI, 38 had ratified it, and it had modified 180 bilateral tax treaties. Once all signatories have ratified the MLI, around 65% of all agreements between Inclusive Framework members will be modified by the MLI to include the minimum standard (and other BEPS treaty related provisions). Other jurisdictions have expressed interest in signing the MLI and, if all waiting agréments become covered tax agreements, this figure could be as high as 85%. In light of the experience in conducting the peer reviews, the peer review methodology will be reviewed in 2020.
This article is part of series in which OECD experts and thought leaders – from around the world and all parts of society – address the COVID-19 crisis, discussing and developing solutions now and for the future. The number of COVID-19 cases is quickly rising around the world, with major adverse effects on health and mortality. To fight the outbreak and the spread of the virus, countries are imposing unprecedented measures, such as restrictions on the free movement of people and goods, and are shutting down large parts of the economy. The result is that economic activity has fallen sharply in many countries and increased global uncertainty has further eroded confidence. Apart from responding to the escalating health emergency, the immediate economic priority for policymakers is to respond quickly to provide support to households and to improve cash-flow for businesses: we need to keep capacities of production and distribution intact throughout this crisis. The goal is to ensure that households and businesses are able to keep their heads above water until the health crisis can be contained, so that the economy is ready to rebound once the worst of the pandemic has passed. While the OECD will keep working on long-term projects like tax co-operation among countries, international standards to eliminate double taxation, and the mobilisation of domestic resources, we have prioritised work on a range of targeted and temporary tax policy and tax administration measures governments could consider as part of their immediate response. We have also compiled all tax measures taken by governments to produce a useful toolkit. (…)
OECD – FORUM ON TAX ADMINISTRATION – TAX ADMINISTRATION RESPONSES TO COVID -19: SUPPORT FOR TAXPAYERS. The Covid -19 emergency will affect the lives of many people around the globe. There are a number of ways that governments and tax administrations can ease burdens on Taxpayers and support businesses and individuals with cash-flow problems or with difficulties in meeting tax reporting or payment obligations. The suggestions below are not recommendations but are intended to assist administrations globally in their consideration of appropriate measures in their own national contexts to help taxpayers during this difficult period. Not all of these possibilities will be currently available to all tax administrations and may need legislative changes. 16 March 2020.
OECD – EMERGENCY TAX POLICY RESPONSES TO THE COVID -19 PANDEMIC. LIMITING DAMAGE TO PRODUCTIVE POTENTIAL AND PROTECTING THE VULNERABLE. Emergency tax policy responses to the Covid -19 pandemic limiting damage to productive potential and protecting the vulnerable detected cases of Covid-19 are quickly rising in many countries, with major adverse effects on health and mortality. To fight the outbreak and spread of the virus, countries are imposing unprecedented measures. The result is that Economic activity has decreased sharply in many countries and greater uncertainty has eroded confidence. In the face of this crisis, the immediate priority is to respond quickly to support households and improve liquidity for businesses to keep the productive capacity of economies intact as much as possible. A range of tax policy and tax administration measures could be considered by governments. These potential measures, which are not recommendations but are intended to assist policymakers as they respond in their own national context, include: (…) 20 March 2020.
This report is an outcome of the joint project on transfer pricing between OECD and Receita Federal do Brasil (RFB). It contains the findings of the in-depth analysis of similarities and differences between the transfer pricing framework currently in place in Brazil as compared to the OECD guidance (OECD Transfer Pricing Guidelines for Multinational Enterprise and Tax Administrations), which is the international consensus on transfer pricing. The report also explores the options for Brazil to converge with the OECD transfer pricing standard while enhancing the positive attributes of the existing framework. In February 2018, the OECD and Brazil launched a joint project to examine the similarities and divergences between the Brazilian and OECD transfer pricing approaches to valuing cross – border transactions between associated enterprises for tax purposes. This initiative builds on Brazil’s robust engagement in the OECD’s tax work, which began in 2010 when it joined the Global Forum on Transparency and Exchange of Information for Tax Purposes, and was further strengthened in 2013 when it became a member of the G20/OECD Project to counter Base Erosion and Profit Shifting (BEPS), which had a substantial focus on transfer pricing. Beyond just taxation, in 2017, Brazil also expressed interest in initiating the process to join the OECD. Objective: assessing the strengths and weaknesses of Brazil’s transfer pricing framework The 15 – month work programme carried out by the OECD jointly with Receita Federal do Brasil (RFB) included an in depth analysis of the Brazilian transfer pricing legal and administrative framework as well as its application. Based on the assessment of its strengths and weaknesses, possible options were explored for Brazil’s alignment with the OECD internationally accepted transfer pricing standard, using the OECD Transfer Pricing Guidelines and other relevant OECD guidance as a reference for the analysis.
OECD Environment Working Papers N. 70 – ENVIRONMENTAL AND RELATED SOCIAL COSTS OF THE TAX TREATMENT OF COMPANY CARS AND COMMUTING EXPENSES. This paper builds upon a recent OECD paper on the personal tax treatment of company cars and commuting expenses in OECD member-countries and aims to arrive at a better understanding of the environmental and related social costs of the tax treatment described therein. The paper begins with an analysis of the larger transport market, which is the primary storehouse of evidence on the nature and extent of the environmental impacts of the various transport modes, the relative importance of the proximate and underlying determinants of these impacts, and the elasticities and functional relationships at work. Non-linearities in the relevant elasticities and functional relationships mean that the tax treatment of company cars may have a greater or lesser impact than is suggested by the size of the company car market. And distortions in relative prices between competing modes in the larger transport market mean that subsidies can have very different impacts depending on the mode in question. The further analysis of the interaction of the current tax treatment of company cars and commuting expenses with the transport market yields several findings. The current under-taxation of company cars is likely to result in a disproportionately large increase in total distance driven, composed of both an increase in the number of cars in use and an increase in distance driven per car. In turn, this is likely to result in disproportionately large impacts on most relevant environmental and related social costs. And a favourable tax treatment of commuting expenses generally, and of employer-paid parking in particular, is likely to impact on the choice of transport mode in favour of the car relative to public transport and non-motorised modes. In turn, this is likely to impact on most relevant environmental and related social costs. An Annex to this paper provides, for the OECD group of countries as a whole, some indicative estimates of the main relevant impacts of the under-taxation of company cars as well as an indicative estimate of its overall social cost. The largest quantified cost elements are additional congestion costs; additional local air pollution costs; and additional traffic accident costs. The overall social cost attributable to the current under-taxation of company cars is estimated at circa EUR 116 billion per year. (Rana Roy).
OECD – CORPORATE TAX STATISTICS. FIRST EDITION. The Corporate Tax Statistics database is intended to assist in the study of corporate tax policy and expand the quality and range of data available for the analysis of base erosion and profit shifting (BEPS). In developing this first edition of the database, the OECD has worked closely with members of the Inclusive Framework on BEPS (Inclusive Framework) and other jurisdictions willing to participate in the collection and compilation of statistics relevant to corporate taxation. The 2015 Measuring and Monitoring BEPS, Action 11 report highlighted that the lack of quality data on corporate taxation is a major limitation to the measurement and monitoring of the scale of BEPS and the impact of the OECD/G20 BEPS project. While this database is of interest to policy makers from the perspective of BEPS, its scope is much broader. Apart from BEPS, corporate tax systems are important more generally in terms of the revenue that they raise and the incentives for investment and innovation that they create. The Corporate Tax Statistics database brings together a range of valuable information to support the analysis of corporate taxation, in general, and of BEPS, in particular. The database compiles new data items and statistics currently collected and stored by the OECD in various existing data sets. The first edition of the database contains four main categories of data: l corporate tax revenues; l statutory corporate income tax rates; l corporate effective tax rates; l tax incentives related to innovation. Future editions will also include an important new data source: aggregated and anonymised statistics of data collected under the BEPS Action 13 Country-byCountry Reports.
OECD/G20 Base Erosion and Profit Shifting Project. HARMFUL TAX PRACTICES – 2017 PEER REVIEW REPORTS ON THE EXCHANGE OF INFORMATION ON TAX RULINGS. INCLUSIVE FRAMEWORK ON BEPS: ACTION 5. The integration of national economies and markets has increased substantially in recent years, putting a strain on the international tax rules, which were designed more than a century ago. Weaknesses in the current rules create opportunities for base erosion and profit shifting (BEPS), requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created. Following the release of the report Addressing Base Erosion and Profit Shifting in February 2013, OECD and G20 countries adopted a 15-point Action Plan to address BEPS in September 2013. The Action Plan identified 15 actions along three key pillars: introducing coherence in the domestic rules that affect cross-border activities, reinforcing substance requirements in the existing international standards, and improving transparency as well as certainty. After two years of work, measures in response to the 15 actions were delivered to G20 Leaders in Antalya in November 2015. All the different outputs, including those delivered in an interim form in 2014, were consolidated into a comprehensive package. The BEPS package of measures represents the first substantial renovation of the international tax rules in almost a century. Once the new measures become applicable, it is expected that profits will be reported where the economic activities that generate them are carried out and where value is created. BEPS planning strategies that rely on outdated rules or on poorly co-ordinated domestic measures will be rendered ineffective. Implementation is now the focus of this work. The BEPS package is designed to be implemented via changes in domestic law and practices, and in tax treaties. With the negotiation of a multilateral instrument (MLI) having been finalised in 2016 to facilitate the implementation of the treaty related BEPS measures, over 80 jurisdictions are covered by the MLI. The entry into force of the MLI on 1 July 2018 paves the way for swift implementation of the treaty related measures. OECD and G20 countries also agreed to continue to work together to ensure a consistent and co-ordinated implementation of the BEPS recommendations and to make the project more inclusive. Globalisation requires that global solutions and a global dialogue be established which go beyond OECD and G20 countries. A better understanding of how the BEPS recommendations are implemented in practice could reduce misunderstandings and disputes between governments. Greater focus on implementation and tax administration should therefore be mutually beneficial to governments and business. Proposed improvements to data and analysis will help support ongoing evaluation of the quantitative impact of BEPS, as well as evaluating the impact of the countermeasures developed under the BEPS Project. As a result, the OECD established the Inclusive Framework on BEPS, bringing all interested and committed countries and jurisdictions on an equal footing in the Committee on Fiscal Affairs and all its subsidiary bodies. The Inclusive Framework, which already has more than 120 members, is monitoring and peer reviewing the implementation of the minimum standards as well as completing the work on standard setting to address BEPS issues. In addition to BEPS members, other international organisations and regional tax bodies are involved in the work of the Inclusive Framework, which also consults business and the civil society on its different work streams. This report was approved by the Inclusive Framework on BEPS on 13 November 2018 and prepared for publication by the OECD Secretariat.