IMF, OECD, UN AND WORLD BANK – OPTIONS FOR LOW INCOME COUNTRIES’ EFFECTIVE AND EFFICIENT USE OF TAX INCENTIVES FOR INVESTMENT

IMF, OECD, UN AND WORLD BANK – OPTIONS FOR LOW INCOME COUNTRIES’ EFFECTIVE AND EFFICIENT USE OF TAX INCENTIVES FOR INVESTMENT. A REPORT TO THE G-20 DEVELOPMENT WORKING GROUP BY THE IMF, OECD, UN AND WORLD BANK.  This report was prepared at the request of the G20 Development Working Group by the staffs of the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations and the World Bank. It has benefitted from consultation with other organisations working in the tax area, officials of developing countries, Civil Society Organisations, and business representatives. The report is prepared under the responsibility of the Secretariats and Staff of the four organisations. It reflects a broad consensus among these staff, but should not necessarily be regarded as the officially-endorsed views of those organisations or their member states. The report was presented as requested to the G20 DWG in September, 2015, and to the Executive Board of the IMF for information, in October, 2015. Experience shows that there is often ample room for more effective and efficient use of investment tax incentives in low-income countries. Tax incentives generally rank low in investment climate surveys in low-income countries, and there are many examples in which they are reported to be redundant—that is, investment would have been undertaken even without them. And their fiscal cost can be high, reducing opportunities for much-needed public spending on infrastructure, public services or social support, or requiring higher taxes on other activities. Effective and efficient use of tax incentives requires that they be carefully designed. Many low-income countries use costly tax holidays and income tax exemptions to attract investment, while investment tax credits and accelerated depreciation yield more investment per dollar spent. Tax incentives targeted at sectors producing for domestic markets or extractive industries generally have little impact, while those geared toward export-oriented sectors and mobile capital appear to be relatively effective – but the former need to be tempered by considerations of WTO consistency and both can be instances of mutually damaging tax competition. Enabling conditions – good infrastructure, macroeconomic stability, rule of law, etc.- are important for effectiveness. Good governance of incentives is critical for their effectiveness and efficiency. Transparency is necessary to facilitate accountability and reduce opportunities for rent seeking and corruption. Tax incentives should therefore be subject to legislative process, consolidated under the tax law, and their fiscal costs reviewed annually as part of a tax-expenditure review. The approval process of tax incentives may involve several stakeholders, but is ultimately best consolidated under the authority of the Minister of Finance and enforced and monitored by the tax administration. To the extent possible, the granting of tax incentives should be based on rules rather than discretion. Despite political obstacles, several countries have successfully reformed their tax incentive regimes. The proliferation of incentives is largely a manifestation of international tax competition—which regional coordination can help mitigate, although this requires political commitment and an effective supranational enforcement mechanism—which is often lacking. Common reporting standards and data collection can be an important first step toward coordination and enhanced transparency. More systematic evaluations are needed to facilitate informed decision making. In most low-income countries, the effectiveness and efficiency of tax incentives cannot be assessed due to lack of data and the absence of analytical tools and skills. The background document to this report offers guidance on how to develop the data and tools required for systematic analysis. Progress requires concerted action by several stakeholders to ensure evidence-based, transparent decision making.

OECD Taxation Working Papers N. 32 – Legal tax liability, legal remittance responsibility and tax incidence

THREE DIMENSIONS OF BUSINESS TAXATION. This paper examines the role of businesses in the tax system. In addition to being directly taxed, businesses act as withholding agents and remitters of tax on behalf of others. Yet the share of tax revenue that businesses remit to governments outside of direct tax liabilities is under-studied. This paper develops two measures of the contribution of businesses to the tax system: (i) legal tax liability and (ii) legal remittance responsibility. Legal tax liability is defined as the sum of taxes that are imposed on businesses directly (e.g., corporate income tax), whereas legal remittance responsibility is the sum of taxes that businesses remit on behalf of others in the economy (e.g., tax on the wages of employees, sales and value-added taxes). This paper considers both measures for 24 OECD countries using data from the OECD’s Revenue Statistics database and additional information gathered from OECD member countries. Care should be taken in interpreting both measures, which should be understood against the backdrop of the issue of economic incidence. Economic incidence refers to the fact that the burden of a tax is not necessarily borne by the person on whom the tax is imposed under legal statute. For example, a tax imposed on capital owners may either be absorbed or shifted onto others in the economy, such as consumers or workers. Economic incidence will vary according to many factors, such as type of tax, country, and labour and product market structures. Recognising the importance of this issue for policymakers, the paper reviews the empirical literature on the economic incidence of taxation and summarises the estimates by tax category. Some of the key findings of the paper include: · Businesses play an important role in the tax system, both as taxpayers and as remitters of tax on behalf of others. Governments often rely upon businesses to remit taxes imposed on others for reasons of administrative ease – arising from the economies of scale of taxing fewer large entities – and improved tax compliance. · The results show that businesses remit an important share of tax revenue to governments. This takes two forms: legal tax liabilities imposed directly on businesses (which account for 33.5% of total tax revenue in 2014, on average, across the 24 OECD countries analysed) and taxes remitted on behalf of others (45.3% of total tax revenue, on average, across the same set of countries). · While businesses benefit in certain ways through their involvement in the tax collection process (e.g., the cash flow benefit), their remittance responsibilities also entail compliance costs. The analysis of businesses’ overall role in remitting taxes to governments should include not just their legal tax liabilities, but also the compliance costs incurred on account of their legal remittance responsibilities. · However, consideration of both the legal tax liabilities and legal remittance responsibilities of businesses does not necessarily provide evidence of who actually bears the burden of these taxes. In this regard, these two measures of the contribution of businesses to the tax system should take account of the crucial issue of economic incidence. · This paper finds that the majority of empirical studies of economic incidence focus on the corporate income tax, where a wide-ranging review of the literature finds that it is likely that at least 30% of the corporate income tax is shifted onto labour. · While there has been much research undertaken on the economic incidence of the corporate income tax, this paper calls for additional future empirical work on the economic incidence of other taxes. The paper highlights two additional issues. First, though there is little empirical evidence available concerning the economic incidence of compliance costs, the channels through which tax burdens are passed on to others in the economy likely also apply to compliance costs. Finally, there is recent evidence that economic incidence may vary depending upon which entity is assigned responsibility for remitting a tax. More empirical research is needed in both of these areas. Milanez, A. (2017).

OECD/G20 Base Erosion and Profit Shifting Project – ADDRESSING THE TAX CHALLENGES OF THE DIGITALISATION OF THE ECONOMY – POLICY NOTE

OECD/G20 Base Erosion and Profit Shifting Project – ADDRESSING THE TAX CHALLENGES OF THE DIGITALISATION OF THE ECONOMY – POLICY NOTE. As approved by the Inclusive Framework on BEPS on 23 January 2019. The tax challenges of the digitalisation of the economy were identified as one of themain areas of focus of the Base Erosion and Profit Shifting (BEPS) Action Plan, leading to the 2015 BEPS Action 1 Report (the Action 1 Report). The Action 1 Report found that the whole economy was digitalizing and, as a result, it would be difficult, if not impossible, to ring-fence the digital economy. The Action 1 Report also observed that, beyond BEPS, the digitalisation of the economy raised a number of broader direct tax challenges chiefly relating to the question of how taxing rights on income generated from cross-border activities in the digital age should be allocated among countries. Following a mandate by G20 Finance Ministers in March 2017, the Inclusive Framework, working through its Task Force on the Digital Economy (TFDE) delivered an Interim Report in March 2018, Tax Challenges Arising from Digitalisation – Interim Report 2018 (the Interim Report). The Interim Report provided an in-depth analysis of value creation across new and changing business models in the context of digitalisation and the tax challenges they presented.1 These challenges included risks remaining after BEPS for highly mobile income producing factors which still can be shifted into low-tax environments. While members of the Inclusive Framework did not converge on the conclusions to be drawn from this analysis, they committed to continue working together towards a final report in 2020 aimed at providing a consensus-based long-term solution, with an update in 2019. Conscious of the G20 time frame and the significance of the issue, the TFDE further intensified its work since the delivery of the Interim Report. Drawing on the analysis included in the Action 1 Report as well as the Interim Report, and informed by recent discussions at the July and December meetings of the TFDE on a “without prejudice” basis, a number of proposals have been made. These proposals, together with the recent discussions and comments from members of the Inclusive Framework, lay the grounds for the Inclusive Framework to come to an agreement on the way forward.

OECD – SIGNATORIES AND PARTIES TO THE MULTILATERAL CONVENTION TO IMPLEMENT TAX TREATY RELATED MEASURES TO PREVENT BASE EROSION AND PROFIT SHIFTING

OECD – SIGNATORIES AND PARTIES TO THE MULTILATERAL CONVENTION TO IMPLEMENT TAX TREATY RELATED MEASURES TO PREVENT BASE EROSION AND PROFIT SHIFTING. Status as of 29 January 2019. This document contains a list of signatories and parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Under the provisions of the Convention, each jurisdiction is required to provide a list of reservations and notifications (the “MLI Position”) at the time of signature. The MLI Positions provided for each jurisdiction upon the deposit of the instrument of ratification, acceptance or approval and/or signature are available via the links below.

OECD – MODEL MANDATORY DISCLOSURE RULES FOR CRS AVOIDANCE ARRANGEMENTS AND OPAQUE OFFSHORE STRUCTURES

1.The purpose of these model mandatory disclosure rules is to provide tax administrations with information on CRS Avoidance Arrangements and Opaque Offshore Structures, including the users of those Arrangements and Structures and those involved with their supply. Information disclosed pursuant to the application of these model rules can be used both for compliance purposes and to inform future tax policy design. These rules should also have a deterrent effect against the design, marketing and use of arrangements covered by the rules. 2. The model rules require an Intermediary or user of a CRS Avoidance Arrangement or Opaque Offshore Structure to disclose certain information to its tax administration. Where such information relates to users that are resident in another jurisdiction it would be exchanged with the tax administration(s) of that jurisdiction in accordance with the terms of the applicable international legal instrument. 3. The mandatory disclosure rules do not affect the substantive provisions of a jurisdiction’s CRS Legislation or impact on any reporting outcomes under the CRS. Rather these rules are information gathering tools that seek to bolster the integrity of the CRS by deterring advisors and other intermediaries from promoting certain schemes. The rules seek to accomplish this by providing tax administrations and policy makers with information on schemes, their users and suppliers, for use in compliance activities, exchange with treaty partners and tax policy design. 4. Consistent with the concepts on mandatory disclosure articulated in the BEPS Action 12 Report the model rules are not limited to situations of non-compliance with the tax law (including the rules on CRS reporting). Thus, a disclosure under the rules does not necessarily imply a violation of any tax rule and will not always result in the tax administration taking compliance action in respect of a disclosed Arrangement. Equally, the fact that a tax administration does not respond to a disclosure does not imply any acceptance of the validity or tax treatment of the Arrangement by the tax administration. Jurisdictions implementing these model rules would need to take into account domestic specificities in their own CRS Legislation and the interaction of these model rules with existing anti-avoidance rules.

OECD – Fighting Tax Crime: The Ten Global Principles

OECD – Fighting Tax Crime: The Ten Global Principles. This is the first comprehensive guide to fighting tax crimes. It sets out ten global principles, covering the legal, strategic, administrative and operational aspects of addressing tax crimes. The guide has been prepared by the OECD Task Force on Tax Crimes and Other Crimes (TFTC). It draws on the experience of the members of the TFTC as well as additional survey data provided by 31 jurisdictions: Australia, Austria, Brazil, Canada, Czech Republic, Denmark, El Salvador, Finland, France, Georgia, Germany, Greece, Iceland, Indonesia, Italy, Japan, Lithuania, Luxembourg, Malaysia, the Netherlands, New Zealand, Norway, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, the United Kingdom and the United States. The guide shows that the fight against tax crime is being actively pursued by governments around the world. Jurisdictions have comprehensive laws that criminalise tax offences, and the ability to apply strong penalties, including lengthy prison sentences, substantial fines, asset forfeiture and a range of alternative sanctions. Jurisdictions generally have a wide range of investigative and enforcement powers as well as access to relevant data and intelligence. Suspects’ rights are nearly universally understood in the same way and enshrined in law. Increasingly, jurisdictions are taking a strategic approach to addressing tax offences, which includes targeting key risks and leveraging the tools for co-operation with other law enforcement agencies, both domestically and internationally. At the same time, tax crime investigations increasingly need to be undertaken with greater efficiency and fewer resources. However, data shows that the investment is worthwhile, with some jurisdictions being able to calculate the return on investment from the criminal tax investigation teams and reporting recovery of funds well in excess of the expenditure, ranging from 150% to 1500% return on investment. The role played by criminal tax investigators thus contributes significantly to jurisdiction’s overall tax compliance efforts. The implementation of the 10 global principles around the world is critical in addressing the tax gap and supporting domestic resource mobilisation. Recommendations: This guide recommends that jurisdictions benchmark themselves against each of the ten global principles. This includes identifying areas where changes in law or operational aspects are needed, such as increasing the type of investigative or enforcement powers, expanding access to other government-held data, devising or updating the strategy for addressing tax offences, and taking greater efforts to measure the impact of the work they do. In particular, developing jurisdictions are encouraged to use the guide as a diagnostic tool to identify principles which may not yet be in place. Jurisdictions which have made commitments to capacity building for developing jurisdictions in tax matters (such as the Addis Tax Initiative or the G7 Bari Declaration) are recommended to consider how they can work with developing jurisdictions to enhance tax crime investigation based on this guide, including through providing support for the OECD International Academy for Tax Crime Investigation and other regional initiatives. The TFTC will continue its work in facilitating international co-operation on fighting tax crime, particularly on issues where multilateral action is required to address common challenges. This could also include collaborating to create an agreed strategy for addressing tax crimes that have cross-border elements. Such a strategy could include identifying the risks of such tax crimes, defining the additional data and other mechanisms that are needed to more effectively combat such tax crimes and working towards ensuring that data and mechanisms are available and efficient in practice.

OECD – Improving Co-operation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption

OECD – Improving Co-operation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption. 1. Countries around the globe are facing a common threat posed by increasingly complex and innovative forms of financial crime. By exploiting modern technology and weaknesses in local legislation, criminals can now covertly move substantial sums between multiple jurisdictions with relative ease and great speed. As a consequence, criminal activity such as tax evasion, bribery and other forms of corruption are becoming ever more sophisticated. Meanwhile, law enforcement structures have, in many cases, not evolved at the same speed and the international community has struggled to keep up with this threat. 2. While viewed as distinct crimes, tax crime and corruption are often intrinsically linked, as criminals fail to report income derived from corrupt activities for tax purposes, or over-report in an attempt to launder the proceeds of corruption. A World Bank study of 25 000 firms in 57 countries found that firms that pay more bribes also evade more taxes. 1 More broadly, where corruption is prevalent in society, this can foster tax evasion. A recent IFC Enterprise Survey found that 13.3% of businesses globally report that “firms are expected to give gifts in meetings with tax officials”, with the frequency of this ranging across countries from nil to 62.6%. 2 3. The links between tax crime and corruption mean that tax authorities and law enforcement authorities can benefit greatly from more effective co-operation and sharing of information. Tax authorities hold a wealth of personal and company information such as income, assets, financial transactions and banking information, that can be a valuable source of intelligence to anti-corruption investigators. Similarly, anticorruption authorities can provide tax administrations with important information about ongoing and completed corruption investigations that could assist a decision to reopen a tax assessment, initiate a tax crime investigation, or more generally promote integrity among tax officials. The investigation into Brazilian majority-state-owned oil company, Petrobras, initiated in 2014, is a prime example of this. Civil tax auditors played a critical role in this transnational corruption investigation by analysing suspects’ tax and customs data and sharing this with the police and public prosecutor as permitted by law. As a result, officials were able to uncover evidence of money laundering, tax evasion, and hidden assets, and to track financial flows. While criminal investigations and prosecutions are still ongoing, as of August 2018, the operation has resulted in dozens of charges against high profile public officials and politicians and billions of dollars in criminal fines, tax penalties, and recovered assets. 4. However, there remains significant room for improvement in co-operation between tax authorities and anti-corruption authorities. Despite success stories, anecdotal evidence provided by many jurisdictions involved in this report suggests that reporting and information sharing between authorities often occurs on ad-hoc basis rather than systematically. This is reinforced by the OECD’s 2017 study on the Detection of Foreign Bribery, which provides that only 2% of concluded foreign bribery cases between 1999 and 2017 were detected by tax authorities.3 5. These issues are at the heart of the current global agenda. In 2015, the United Nations agreed 17 Sustainable Development Goals, including a specific target of substantially reducing corruption in all of its forms. 4 The World Bank and OECD strongly support these goals and recognise the importance of dealing with corruption and tax evasion at a policy and technical level. In this context, for many years, international organisations including the OECD and World Bank have been active in supporting countries to strengthen their legal and institutional frameworks for the prevention, detection, investigation, and prosecution of tax crime and corruption, and the recovery of the proceeds of these crimes. In 2012, the Financial Action Task Force (FATF) recognised these links by including corruption, bribery, and tax crimes in the list of designated predicate offences for money laundering purposes in its International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. 5 6. In 20096 and 20107 , the OECD issued two Council Recommendations calling for greater co-operation and better information sharing between different government agencies involved in combating financial crimes. These are supported by the Oslo Dialogue, an initiative which encourages a whole of government approach to tackling all forms of financial crime. 8 As part of this initiative, in 2017, the OECD published its third edition of Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes (the Rome Report) which analyses the legal gateways and mechanisms for inter-agency co-operation between authorities responsible for investigating tax and other financial crimes. At the same time, the OECD published Ten Global Principles for Fighting Tax Crime, the first report of its kind which allows countries to benchmark their legal and operational frameworks for tackling tax crime, and identify areas where improvements can be made. 7. The OECD continues to advance practical tools and training to combat tax crime and corruption. OECD Handbooks on Money Laundering Awareness and Bribery and Corruption Awareness provide practical guidance to help tax officials identify indicators of possible criminal activity in the course of their work. In 2013, the OECD International Academy for Tax Crime Investigation was launched in co-operation with Italy’s Guardia di Finanza to strengthen developing countries’ capacity to tackle illicit financial flows. In 2017, a sister Academy was piloted in Kenya and will be formally launched in Nairobi, in late 2018. In July 2018, OECD and Argentina’s Federal Administration of Public Revenue (AFIP) signed a MoU to establish a Latin American centre of the OECD Academy in Buenos Aires, Argentina, with the first programme planned for late 2018. 8. The World Bank is also helping strengthen developing countries’ capacity to stem tax evasion. In 2015, the World Bank and the International Monetary Fund (IMF) launched the Joint Initiative to Support Developing Countries in Strengthening Tax Systems to give greater voice to developing countries in the global debate on tax issues. 9 Through this joint initiative, the World Bank and the IMF are assembling a set of tools and guidance aimed at addressing developing economy needs. As part of this work, the World Bank has also partnered with the governments of Norway and Denmark to launch the Tax Evasion Initiative to enable enforcement agencies in developing countries to more effectively combat tax crimes and other financial crimes. Under the Tax Evasion Initiative, the World Bank is developing a set of tools, including a handbook on tax evasion schemes and red flags for tax investigators and auditors, as well as a methodology for assessing the performance of criminal tax investigation units which is currently being piloted. 9. In researching, developing, and publishing this joint report on the legal, strategic, and operational aspects of co-operation between tax authorities and anti-corruption authorities, the World Bank and OECD aim to complement their existing work and advance the shared objective of improving the capacity of all countries to effectively combat financial crime.

OECD Taxation Working Papers N. 39 – Simplified registration and collection mechanisms for taxpayers that are not located in the jurisdiction of taxation

OECD Taxation Working Papers N. 39 – SIMPLIFIED REGISTRATION AND COLLECTION MECHANISMS FOR TAXPAYERS THAT ARE NOT LOCATED IN THE JURISDICTION OF TAXATION. A REVIEW AND ASSESSMENT. This paper reviews and evaluates the efficacy of simplified tax registration and collection mechanisms for securing compliance of taxpayers over which the jurisdiction with taxing rights has limited or no authority to effectively enforce a tax collection or other compliance obligation. Although the experience of jurisdictions in addressing this problem has involved primarily consumption taxes, that experience, and the lessons that can be learned from it, are applicable as well to other tax regimes that confront the same problem. Many jurisdictions have implemented (and are in the process of implementing) simplified registration and collection regimes in the business-to-consumer (B2C) context for taxpayers that are not located in the jurisdiction of taxation. Although the evidence regarding the performance of the simplified regimes adopted by jurisdictions is still quite limited, the best available evidence at present (in the European Union) indicates that simplified regimes can work well in practice and a high level of compliance can be achieved since there is a concentration of the overwhelming proportion of the revenues at stake in a relatively small proportion of large businesses and since the compliance burden has been reduced as far as possible. It also indicates that the adoption of thresholds may be an appropriate solution to avoid imposing a disproportionate administrative burden with respect to the collection of tax from small and micro-businesses in light of the relatively modest amount of revenues at stake and that a good communications strategy is essential to the success of a simplified regime (including appropriate lead time for implementation). In sum, simplified registration and collection regimes represent an effective approach to securing tax compliance when the jurisdiction has limited or no authority effectively to enforce a tax collection or other compliance obligation upon a taxpayer.

OECD SECRETARY-GENERAL REPORT TO G20 LEADERS

OECD SECRETARY-GENERAL REPORT TO G20 LEADERS – Since 2008, the G20 has made the fight against international tax fraud and avoidance a priority. Thanks to the support of Leaders and Finance Ministers, major progress has been achieved, demonstrating that international co-operation in a multilateral framework can support and strengthen national sovereignty. In my last report to you, at your meeting in Hamburg in 2017, I told you that we were about to bring to fruition the G20 mandate for the automatic exchange of financial account information (AEOI) with first exchanges to start in September 2017. It is estimated that by June 2018, jurisdictions around the globe have identified EUR 93 billion in additional revenue (tax, interest, penalties) as a result of voluntary compliance mechanisms and other offshore investigations put in place since 2009. AEOI is now happening in 83 jurisdictions that committed to exchange by 2018. Moreover, details on hundreds of billions of euros of accounts have been exchanged in 2017, the first year of operation of the OECD’s Common Reporting Standard. I reported on the outcome of your request to establish objective criteria to identify jurisdictions that were not implementing the tax transparency standards and the significant impact that this process had on encouraging jurisdictions to make changes. The OECD has now delivered strengthened criteria to be applied at the time of next year’s Summit and can report today that 15 jurisdictions are at risk of being identified. We are working with these jurisdictions and I will report to you at your Summit in 2019 on the progress made, along with a list of any jurisdictions that have not made enough progress. After the delivery of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Package of 15 Actions, the key issue for the international tax community in 2018 remains how to address the tax challenges arising from digitalisation. In March, I delivered an Interim Report to Finance Ministers, providing an economic analysis of the features of the highly digitalised business models. It was agreed that, in spite of divergences on the consequences to draw, countries would seek a consensus based solution in a context where a number of governments feel urged to move to short term interim measures. Since March, the 124 members of the Inclusive Framework for BEPS Implementation, steered by G20 countries, have made significant progress to bridge the gaps in their position. Following the US tax reform, the United States has in particular agreed to engage in the search of a global solution which would address further challenges. Equally, France and Germany have now proposed to explore the feasibility of a global anti-base erosion mechanism. The United Kingdom made a proposal focussed on a reallocation of taxing rights based on active user contribution in some business models. Many other countries are now involved actively in this discussion. The G20 has an opportunity to seize the moment by maintaining the political focus on reaching a global, consensus-based solution. The Task Force will meet in December and the Inclusive Framework then meets in January to take these proposals further. A strong showing of unity and commitment to work together at the highest political level will be a key ingredient in finding the common ground that we are seeking. The Inclusive Framework will hold a second meeting in 2019 just before your next Leaders’ Summit. My hope is that at that Summit you will be able to celebrate an agreement on the what and how of a long-term solution to be delivered in 2020. These discussions are taking place against the back-drop of wide-spread implantation of the BEPS Package. In July last year the OECD/G20 Inclusive Framework on BEPS was up and running and the peer reviews of the minimum standards had begun. The first results from the peer reviews of the OECD/G20 BEPS Project are in and show strong implementation by the members of the BEPS Inclusive Framework. While the BEPS Project addresses double non-taxation, ensuring that international trade and investment does not face double taxation remains a priority. The OECD, in collaboration with the IMF, had produced a first report on tax certainty. In July we delivered an update on that report and look forward to taking this work forward with renewed emphasis. Our work on building capacity in developing countries is on-going, including support for the G20 Compact with Africa and our work through the Platform for Collaboration on Tax. We have continued to deliver a strong program of work in supporting capacity building in developing countries, particularly through the Platform for Collaboration (PCT) on Tax. Buenos Aires, Argentina. December 2018.

OECD – INTERNATIONAL TAX PLANNING AND FIXED INVESTMENT ECONOMICS DEPARTMENTS WORKING PAPERS N. 1361

OECD – INTERNATIONAL TAX PLANNING AND FIXED INVESTMENT ECONOMICS DEPARTMENTS WORKING PAPERS N. 1361. This paper assesses how international tax planning affects real business investment by multinationals. Earlier studies have shown that corporate taxes reduce business investment. This paper shows that tax planning multinationals are less sensitive to corporate taxes than other firms in their investment decisions. This is presumably because tax planning multinationals do not face the full tax burden associated with their investments, since they shift part of the resulting profits to lower-tax rate countries. On average across industries, a 5 percentage point corporate tax rate increase is found to reduce investment by 5% in the long term. In industries with a strong presence of multinationals with profit-shifting opportunities, this effect is halved. These results obtained with industry-level data are confirmed by a firm-level analysis. Consistently with these results, the investment of tax planning multinationals is found to be more sensitive to taxes when strong rules against tax planning are in place.