OECD issues recommendations on implications of the COVID-19 crisis on cross-border workers and other related cross-border matters

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 – TAX IN THE TIME OF COVID-19, by Pascal Saint-Amans. 23 March 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 Taxation Working Papers N. 48 – Carbon pricing design: Effectiveness, efficiency and feasibility. An investment perspective

OECD Taxation Working Papers N. 48 – Carbon pricing design: Effectiveness, efficiency and feasibility. An investment perspective. Carbon pricing helps countries steer their economies towards and along a carbon-neutral growth path. This paper considers how the design of carbon pricing instruments affects their effectiveness, efficiency and feasibility. Design choices matter both for taxes and Emissions Trading Systems (ETSs). Considering the role of carbon price stability for clean investment, the paper shows how volatile carbon prices can cause risk-averse investors to forego clean investment that they would have undertaken with more stable prices. The paper then evaluates the effectiveness and efficiency of policy instruments to stabilise carbon prices in ETSs, which tend to produce more volatile carbon prices than taxes. The paper analyses the auction reserve price in California, the carbon price support in the UK, and the market stability reserve in the EU ETS. Considering feasibility, the paper discusses the tax (or emissions) base, how revenue use can affect support from households and firms, and administrative choices. (Florens Flues and Kurt van Dender, 22 Jun 2020).

OECD – TAX DATABASE. KEY TAX RATE INDICATORS. Update June 2020

OECD – TAX DATABASE. KEY TAX RATE INDICATORS. Update June 2020. This summary presentes comparative information on a range of statutory tax rates and tax rate indicators in OECD countries, encompassing personal income tax rates and social security contributions, corporate income tax rates and value-added taxes. These indicators provide a baseline of information on tax settings in 2019 and in early 2020.

IMF/OECD/UN/WBG – The Platform for Collaboration on Tax. The Taxation of Offshore Indirect Transfers – A Toolkit

IMF/OECD/UN/WBG – The Platform for Collaboration on Tax. The Taxation of Offshore Indirect Transfers – A Toolkit. The tax treatment of ‘offshore indirect transfers’ (OITs) – in essence, the sale of an entity owning an asset located in one country by a resident of another – has emerged as a significant issue in many developing countries. It has been identified in IMF technical assistance work and scoping by the OECD but was not covered by the G20 – OECD project on Base Erosion and Profit Shifting (BEPS). In relation to the extractive industries, OITs are also the subject of work at the UN. The country in which the underlying asset is located may wish to tax gains realized on such transfers – as is currently the case for direct transfers of immovable assets. Some countries may wish to apply this treatment to a wider class of assets, to include more those generating location specific rents – returns that exceed the minimum required by investors and which are not available in other jurisdictions. This might include, for instance, telecom licenses and other rights issued by government. The report also recognizes, however, that gains on OITs may be attributable in part to value added by the owners and managers of such assets, and that some countries may choose not to tax gains on OITs. The provisions of both the OECD and the UN Model treaties suggest wide acceptance that capital gains taxation of OITs of “immovable” assets can be imposed by the location country. It remains the case, however, that the relevant model Article 13(4) is found only in around 35 percent of all Double Tax Treaties (DTTs) and is less likely to be found when one party is a low-income resource – rich country. The MLI has increased the number of tax treaties that include Article 13(4) of the OECD MTC. This impact is expected to increase as new parties sign the MLI and amend their covered tax treaties to include the new language of Article 13(4). Regardless of what any treaty provides, however, such a taxing right cannot be supported without appropriate definition in domestic law of the assets intended to be taxed and without a domestic law basis to assert that taxing right. There is a need for a more uniform approach to the taxation of OITs by those countries that choose to tax them. Countries’ unilateral responses have differed widely, in terms of both which assets are covered and the legal approach taken. Greater coherence could enhance tax certainty. The report outlines two main approaches to the taxation of OITs by the country in which the underlying asset is located – provisions for which require careful drafting. It identifies the two main approaches for so doing and provides, for both, sample simplif ied legislative language for domestic law in the location country. One of these methods (‘Model 1’) treats an OIT as a deemed disposal of the underlying asset. The other (‘Model 2’) treats the transfer as being made by the actual seller, offshore, but sources the gain on that transfer within the location country and so enables that country to tax it. The report expresses no general preference between the two models: the appropriate choice will depend on countries’ circumstances and preferences.

OECD – After the lockdown, a tightrope walk toward recovery

OECD – After the lockdown, a tightrope walk toward recovery. The spread of Covid-19 has shaken people’s lives around the globe in an extraordinary way, threatening health, disrupting economic activity, and hurting wellbeing and jobs.Since our last Economic Outlook update, in early March, multiple virus outbreaks evolved into a global pandemic, moving too fast across the globe for most healthcare systems to cope witheffectively.To reduce the spread of the virus and buy time to strengthen healthcare systems, governments had to shut down large segments of economic activity.At the time of writing, the pandemic has started to recede in many countries, and activity has begun to pick up. The health, social and economic impact of the outbreak could have been considerably worsewithout the dedication of healthcare and other essential workers who continued to servethe public, putting their own health at riskin doing so.Governments and central banks have put in place wide-ranging policies to protect people and businesses from the consequences of the sudden stop in activity.Economic activity has collapsedacross the OECD during shutdowns, by as much as 20 to 30%in some countries, an extraordinary shock. Borders have been closed and trade has plummeted. Simultaneously, governments implementedquick, large and innovative support measuresto cushion the blow, subsidising workersand firms. Social and financial safety nets were strengthened at record speed. As financial stress surged, central banks took forceful and timely action, deploying an array of conventional and unconventional policies above and beyond those used in the Global Financial Crisis, preventing the health and economic crisis from spilling over into a financial one. As long as no vaccine or treatment is widely available, policymakers around the world will continue to walk on a tightrope. Physical distancing and testing, tracking, tracing and isolating (TTTI) will be the main instruments to fight the spread of the virus. TTTI is indispensable for economic and social activities to resume. But thosesectors affected by border closures and those requiring close personal contact, such as tourism, travel, entertainment, restaurants and accommodation will not resume as before. TTTI may not even be enough to prevent a second outbreak of the virus.

OECD – Youth and COVID-19: Response, Recovery and Resilience

OECD – Youth and COVID-19: Response, Recovery and Resilience – The COVID-19 global health emergency and its economic and social impacts have disrupted nearly all aspects of life for all groups in society. People of different ages, however, are experiencing its effects in different ways.For young people, and especially for vulnerable youth, the COVID-19 crisis poses considerable risks in the fields of education, employment, mental health and disposable income. Moreover, while youth and future generations will shoulder much of the long-term economic and social consequences of the crisis, their well-being may be superseded by short-term economic and equity considerations. To avoid exacerbating intergenerational inequalities and to involve young people in building societal resilience, governmentsneed to anticipate the impact of mitigation and recovery measures across different age groups, by applying effective governance mechanisms.Based on survey findings from 90 youth organisations from 48 countries, this policy brief outlines practical measures governments can take to design inclusive and fair recovery measures that leave no one behind. 11June2020.

IAT/IOTA/OECD – Tax Administration Responses to COVID-19: Recovery Period Planning. Version 26 May 2020

CIAT/IOTA/OECD – Tax Administration Responses to COVID-19: Recovery Period Planning. Version 26 May 2020. 1.  Recovery from the profound impacts of the COVID-19 pandemic on people’s lives, jobs, businesses and the wider economy is likely to be lengthy, challenging and multifaceted. Tax administrations, which have played a critical role in the crisis period, will also be central to supporting therecovery. Even during the immediate crisis period there is likely to be significant benefit from early business restoration planning to help identify the main challenges and opportunities for both tax administrations and taxpayers and, where possible, to take early preparatory actions. 2. In undertaking business restoration planning, it will be important to take into account the distinguishing features of the COVID-19 pandemic compared to other crises that are likely to persist during the recovery period. In particular, the continued risks to health, including from further outbreaks; the impacts on staff and administration systems as a result of the need for continuing adjustments; and the potential length and volatility of the recovery period given the depth and scale of the economic shock.3. Against this background, objectives of tax administrations in planning for the recovery period might include: (…)

OECD – In Tax, Gender Blind is not Gender Neutral: why tax policy responses to COVID-19 must consider women

OECD – In Tax, Gender Blind is not Gender Neutral: why tax policy responses to COVID-19 must consider women. Women are at the core of the fight against the COVID-19 crisis: they make up the vast majority of healthcare workers and shoulder much of the childcare and home schooling burden during lockdowns. And while tax policy measures play a crucial role in supporting individuals and businesses as we navigate this crisis, the gender impact of taxation is often overlooked – with serious consequences for gender equality. Gender equality is a fundamental human right, as laid out in the UN’s Sustainable Development Goal #5, and failing to achieve it costs us up to 16% of world income every year. Yet, in the context of government revenue collection, gender balance is often neglected as a policy rationale. Could it be that there simply is no need to assess the interaction of tax and gender, or have gender imbalances in tax systems so far been overlooked? And what does this mean for policy-makers in the face of Covid-19? (…) By Michelle Harding, Grace Perez-Navarro, and Hannah Simon, OECD Centre for Tax Policy and Administration (CTPA). June 1, 2020.

OECD – Tax Administration: Privacy, Disclosure and Fraud Risks Related to COVID-19. Version 26 May 2020

OECD – Tax Administration: Privacy, Disclosure and Fraud Risks Related to COVID-19.Version 26 May 2020. Tax administrations around the globe are taking a series of extraordinary measures to support taxpayers and the wider economy, including through helping to deliver wider government support, while also taking a range of actions to ensure continuity of critical operations and the safety of staff and customers. The speed with which those measures are implemented and the adjustments to some tax administration processes and ways of working can lead, however, to a significant increase of the risks of lapses or deviations from disclosure and privacy requirements as well as the risks of fraud. This document captures some of those high-level risks as well as possible mitigation strategies with a particular focus on remote working issues. It has been produced by the OECD Forum on Tax Administration (FTA) Secretariat in collaboration with the FTA Enterprise Risk Management Community of Interest. It also takes account of input provided by tax administrations, including through virtual meetings, surveys and bilateral discussions. This document does not make recommendations as regards particular measures since national circumstances and considerations will vary greatly. 1. During the current period, the risks of lapses or deviations from disclosure and privacy requirements as well as the risks of fraud have increased markedly. This is due to the large increase in remote working, the fast-moving and potentially confusing nature of changes in processes, increased security risks and greater opportunities for errors, misconduct and fraud. 2. This document captures some high-level risks, mitigations, and exposures / vulnerabilities identified by tax administrations that participate in the OECD Forum on Tax Administration’s Community of Interest on Enterprise Risk Management. The items included are intended to be input for consideration and discussion and are not intended to be comprehensive.