OECD/G20 Base Erosion and Profit Shifting Project – PREVENTING THE GRANTING OF TREATY BENEFITS IN INAPPROPRIATE CIRCUMSTANCES. ACTION 6: 2015 FINAL REPORT. Action 6 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Taxpayers engaged in treaty shopping and other treaty abuse strategies undermine tax sovereignty by claiming treaty benefits in situations where these benefits were not intended to be granted, thereby depriving countries of tax revenues. Countries have therefore agreed to include anti-abuse provisions in their tax treaties, including a minimum standard to counter treaty shopping. They also agree that some flexibility in the implementation of the minimum standard is required as these provisions need to be adapted to each country’s specificities and to the circumstances of the negotiation of bilateral conventions. Section A of this report includes new treaty anti-abuse rules that provide safeguards against the abuse of treaty provisions and offer a certain degree of flexibility regarding how to do so. These new treaty anti-abuse rules first address treaty shopping, which involves strategies through which a person who is not a resident of a State attempts to obtain benefits that a tax treaty concluded by that State grants to residents of that State, for example by establishing a letterbox company in that State. The following approach is recommended to deal with these strategies: • First, a clear statement that the States that enter into a tax treaty intend to avoid creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including through treaty shopping arrangements will be included in tax treaties (this recommendation is included in Section B of the report). • Second, a specific anti-abuse rule, the limitation-on-benefits (LOB) rule, that limits the availability of treaty benefits to entities that meet certain conditions will be included in the OECD Model Tax Convention. These conditions, which are based on the legal nature, ownership in, and general activities of the entity, seek to ensure that there is a sufficient link between the entity and its State of residence. Such limitation-on-benefits provisions are currently found in treaties concluded by a few countries and have proven to be effective in preventing many forms of treaty shopping strategies. • Third, in order to address other forms of treaty abuse, including treaty shopping situations that would not be covered by the LOB rule described above, a more general anti-abuse rule based on the principal purposes of transactions or arrangements (the principal purposes test or “PPT” rule) will be included in the OECD Model Tax Convention. Under that rule, if one of the principal purposes of transactions or arrangements is to obtain treaty benefits, these benefits would be denied unless it is established that granting these benefits would be in accordance with the object and purpose of the provisions of the treaty. The report recognises that each of the LOB and PPT rules has strengths and weaknesses and may not be appropriate for, or accord with the treaty policy of, all countries. Also, the domestic law of some countries may include provisions that make it unnecessary to combine these two rules to prevent treaty shopping. Given the risk to revenues posed by treaty shopping, countries have committed to ensure a minimum level of protection against treaty shopping (the “minimum standard”). That commitment will require countries to include in their tax treaties an express statement that their common intention is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including through treaty shopping arrangements. Countries will implement this common intention by including in their treaties: (i) the combined approach of an LOB and PPT rule described above, (ii) the PPT rule alone, or (iii) the LOB rule supplemented by a mechanism that would deal with conduit financing arrangements not already dealt with in tax treaties. Section A also includes new rules to be included in tax treaties in order to address other forms of treaty abuse. These targeted rules address (1) certain dividend transfer transactions that are intended to lower artificially withholding taxes payable on dividends; (2) transactions that circumvent the application of the treaty rule that allows source taxation of shares of companies that derive their value primarily from immovable property; (3) situations where an entity is resident of two Contracting States, and (4) situations where the State of residence exempts the income of permanent establishments situated in third States and where shares, debt-claims, rights or property are transferred to permanent establishments set up in countries that do not tax such income or offer preferential treatment to that income. The report recognises that the adoption of anti-abuse rules in tax treaties is not sufficient to address tax avoidance strategies that seek to circumvent provisions of domestic tax laws; these must be addressed through domestic anti-abuse rules, including through rules that will result from the work on other parts of the Action Plan. The report includes changes to the OECD Model Tax Convention aimed at ensuring that treaties do not inadvertently prevent the application of such domestic anti-abuse rules. This is done by expanding the parts of the Commentary of the OECD Model Tax Convention that already deal with this issue and by explaining that the inclusion of the PPT rule in treaties, which will incorporate the principle already included in the Commentary of the OECD Model Tax Convention, will provide a clear statement that the Contracting States intend to deny the application of the provisions of their treaties when transactions or arrangements are entered into in order to obtain the benefits of these provisions in inappropriate circumstances. The report also addresses two specific issues related to the interaction between treaties and domestic anti-abuse rules. The first issue relates to the application of tax treaties to restrict a Contracting State’s right to tax its own residents. A new rule will codify the principle that treaties do not restrict a State’s right to tax its own residents (subject to certain exceptions). The second issue deals with so-called “departure” or “exit” taxes, under which liability to tax on some types of income that has accrued for the benefit of a resident (whether an individual or a legal person) is triggered in the event that the resident ceases to be a resident of that State. Changes to the Commentary of the OECD Model Tax Convention will clarify that treaties do not prevent the application of these taxes. Section B of the report addresses the part of Action 6 that asked for clarification “that tax treaties are not intended to be used to generate double non-taxation”. This clarification is provided through a reformulation of the title and preamble of the Model Tax Convention that will clearly state that the joint intention of the parties to a tax treaty is to eliminate double taxation without creating opportunities for tax evasion and avoidance, in particular through treaty shopping arrangements. Section C of the report addresses the third part of the work mandated by Action 6, which was “to identify the tax policy considerations that, in general, countries should consider before deciding to enter into a tax treaty with another country”. The policy considerations described in that section should help countries explain their decisions not to enter into tax treaties with certain low or no-tax jurisdictions; these policy considerations will also be relevant for countries that need to consider whether they should modify (or, ultimately, terminate) a treaty previously concluded in the event that a change of circumstances (such as changes to the domestic law of a treaty partner) raises BEPS concerns related to that treaty. This final version of the report supersedes the interim version issued in September 2014. A number of changes have been made to the rules proposed in the September 2014 report. As noted at the beginning of the report, however, additional work will be required in order to fully consider proposals recently released by the United States concerning the LOB rule and other provisions included in the report. Since the United States does not anticipate finalising its new model tax treaty until the end of 2015, the relevant provisions included in this report will need to be reviewed afterwards and will therefore be finalised in the first part of 2016. An examination of the issues related to the treaty entitlement of certain types of investment funds will also continue after September 2015 with a similar deadline. The various anti-abuse rules that are included in this report will be among the changes proposed for inclusion in the multilateral instrument that will implement the results of the work on treaty issues mandated by the OECD/G20 BEPS Project.


OECD WORK ON TAX AND DEVELOPMENT – The work of the Centre for Tax Policy and Administration (CTPA) has changed dramatically in recent years, including in relation to the role of development and developing countries in our work. I am proud that an increasing number of developing countries are now integrated into our work, as equal members of the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) and the OECD/G20 Inclusive Framework on BEPS (the Inclusive Framework), with a voice on the creation and implementation of new international tax standards. This has been an evolving process. As globalisation increased, the challenges of cross-border taxation have extended beyond the OECD membership, and the CTPA accelerated our dialogue with developing countries accordingly. This started with our Global Relations Programme (GRP) in the early 90’s which has provided training and capacity building for over 25 000 tax officials from the developing world. Since then, we have created a Task Force on Tax and Development, we have expanded our Global Revenue Statistics database to cover more than 90 countries by the end of 2018, we have established audit programmes through our Tax Inspectors Without Borders (TIWB) initiative and we have set up tax crime investigation academies throughout the world. Of greatest significance however has been the establishment of the Global Forum and the Inclusive Framework, which have brought dozens of developing countries into the heart of the work of the CTPA. This has fundamentally changed the nature of how we operate, ensuring development is an integral concern across all of our work. It has also raised expectations as the CTPA is now seen as a key actor in the Domestic Resource Mobilisation (DRM) agenda. This process has been inspired by the wider development landscape, most recently with the Addis Ababa Action Agenda (AAAA) and the Sustainable Development Goals (SDGs). These agreements provide both a framework and a vision for how we can continue to develop international co-operaton in taxation to benefit development. The CTPA has been, and will continue to be, inspired by that vision that sees development as a universal agenda, and we will continue to mainstream development across all of our work. This booklet sets out how we have been doing this, and how we intend to do more in the future. (Preface by Pascal Saint-Amans). 2018-9.


OECD – TAX AND DEVELOPMENT: WHAT DRIVES TAX MORALE? WHAT DO CITIZENS, PARTICULARLY THOSE IN DEVELOPING COUNTRIES, THINK ABOUT PAYING TAX? DOES IT MATTER? THIS STUDY PROVIDES FRESH ANALYSIS OF PUBLIC OPINION SURVEYS TO EXAMINE WHAT LIES BEHIND CITIZENS’ “TAX MORALE” – THEIR MOTIVATION TO PAY THEIR TAXES – OTHER THAN THEIR LEGAL OBLIGATION TO DO SO. Tax revenues provide governments with the funds they need to invest in development, relieve poverty, deliver public services and build the physical and social infrastructure for long-term growth. However, many developing countries face challenges in increasing their revenue from domestic sources. These challenges include a small tax base, a large informal sector, weak governance and administrative capacity, low levels of per capita income, domestic savings and investment and possibly tax avoidance by elites. Some countries, including half of those in sub-Saharan Africa, raise less than 17% of their gross domestic product (GDP) in tax revenues. This is the minimum level considered by the UN as necessary to achieve the Millennium Development Goals. By way of comparison, OECD countries raise on average close to 35% of GDP in tax revenues. Developing countries and development partners alike increasingly realise the importance of mobilising domestic financial resources for development (Box 1.1). For example, the Doha Declaration on Financing for Development (2008) and the Busan Partnership for Effective Development Cooperation (2011) both encourage a greater role for domestic resources, taxation in particular, in funding development Although there is a strong correlation between the level of a country’s development and its tax revenues, there are significant differences across countries at similar stages of development (see Annex A). For example, why is it that while Jordan and Guatemala have very similar levels of GDP per capita, tax revenues in Jordan are around 33% of GDP, while in Guatemala revenues only amount to around 13% of GDP (almost half of the expected level given its GDP per capita)? And why is it that the citizens of some countries are happy to pay their taxes (e.g. practically all Ghana’s citizens), while others are not (e.g. most of Serbia’s)? Research shows a significant correlation between tax morale and tax compliance in both developing and developed countries. For example, tax morale is an important determinant of the “shadow economy” and therefore has an impact on tax evasion (Torgler, 2011). Thus, understanding better what drives differences in tax morale across countries is a key element in understanding differences in tax compliance. It also offers a more “grassroots” perspective on tax systems than administrative and quantitative measures, such as tax to GDP ratio.

OECD Taxation Working Papers N. 2 – What is a “Competitive” Tax System?

OECD Taxation Working Papers N. 2 – What is a “Competitive” Tax System? 1. Statements about the importance of tax systems being ‘competitive’ are often made by business, politicians, lobbyists and other commentators, but what does this term mean? 2. In everyday usage ‘competitive’ is a relative concept. When applied to a business, it would mean that the firm in question is able to produce its output at the same or lower cost than other firms in the same line of business, or that it has some other advantage over them such as the quality of its product. In most industries a competitive firm would (as a result of its cost or other advantages over its rivals) be able to earn returns in excess of its cost of capital. 3. It is more difficult conceptually to apply the term ‘competitive’ to an economy as a whole rather than a particular business. An economy is made up of many different firms (plus extensive public sector provision of services). Moreover the structure of its production and the pattern of its trade will depend on its comparative advantage relative to other economies.2 Specialisation in line with comparative advantage increases production efficiency and raises living standards. 4. For a typical advanced economy (where natural resources and primary products make up a relatively small part of domestic output) there are likely to be strong links between the competitiveness of its firms and the overall levels of productivity and living standards that the country is able to sustain. Individual firms may then be ‘competitive’ internationally (in the sense of having a cost or other advantage relative to their foreign rivals, given the exchange rate, etc); and if a firm is not competitive, then national output and income are likely to be higher if the resources it would have used are redeployed to another line of business where profit opportunities are better. 5. Most of the drivers of the competitiveness of firms lie within the domestic economy. Thus the World Economic Forum, for instance, in its Global Competitiveness Report defines ‘competitiveness’ as ‘the set of institutions, policies and factors that determine the level of productivity of a country’. The level of productivity in turn sets the sustainable level of living standards. The Global Competitiveness Report weights together data pertinent to 12 ‘pillars of competitiveness’: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. 6. There are likely to be significant overlaps and interactions between these ‘pillars’ and views may differ on precisely how they translate into increased production efficiency and growth potential. However, one approach to examining the impact of tax on ‘competitiveness’ is to consider how tax policy and administration impact on the various ‘pillars’ and hence productivity, etc. In practice, most taxes (not just the corporate income tax) can have an impact on competitiveness, as section B below indicates.

EUROsociAL – Buenas prácticas para el desarrollo de los Núcleos de Apoyo Contable y Fiscal (NAF).

EUROsociAL – Buenas prácticas para el desarrollo de los Núcleos de Apoyo Contable y Fiscal (NAF). Comprender que el pago de los impuestos constituye una parte esencial de nuestro papel como ciudadanos democráticos, y no una mera obligación dictada por el Estado, requiere de un profundo cambio cultural que no ha sido aun plenamente asumido por el conjunto de la sociedad. A esa falta de compromiso fiscal por parte de ciertos contribuyentes se añaden problemas en el empleo de los recursos públicos recaudados, como la ausencia de transparencia en las instituciones encargadas de gestionarlos o, incluso, el uso inapropiado de dichos fondos. Este conjunto de factores limita la capacidad y el alcance de las políticas públicas para la cohesión social, constituyendo un círculo vicioso que es preciso superar. América Latina pone de manifiesto la situación descrita. A pesar de los avances registrados en los últimos años, la presión fiscal promedio en la región (24,4% del PIB) sigue lejos de la media de la OCDE (31,2%)1 . A esto se añaden el fraude fiscal2 y la corrupción3 , problemas que erosionan los recursos disponibles para el desarrollo y generan desequilibrios en el contrato entre el Estado y los ciudadanos. El sistema tributario de los países de la zona muestra además un marcado carácter regresivo, con énfasis en los impuestos indirectos. Los Estados latinoamericanos necesitan ser eficaces en la detección y corrección del fraude, teniendo en cuenta que el único mecanismo de actuación no puede ser el coercitivo, sino que es imprescindible mostrar una ‘cara amable’ al contribuyente y facilitarle, en la medida de lo posible, el cumplimiento de sus obligaciones tributarias. Las administraciones fiscales son conscientes de que se requiere la colaboración ciudadana y mucha pedagogía. En este contexto, es importante considerar que el acceso a la información y a unos servicios públicos de calidad, fundamental en el perfeccionamiento de la democracia, aún encuentra barreras en Latinoamérica. Barreras que no se restringen a la cuestión económica, sino que también están vinculadas a dificultades sociales, culturales y educativas. En el ámbito fiscal, dichas barreras son más acentuadas, especialmente en razón de la complejidad que es inherente a los sistemas tributarios. Sin embargo, la complejidad afecta de forma diferente a los distintos grupos sociales. Mientras que una parcela de la sociedad tiene acceso a la información y a la contratación de profesionales especializados, los menos favorecidos encuentran dificultades para costear los servicios de las oficinas contables o aclarar sus dudas a través de los canales oficiales de las Administraciones tributarias, lo que acaba por generar una desigualdad real en la obtención de sus derechos y en el cumplimiento de sus deberes fiscales. (JAUME BLASCO).


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. 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. 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.


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.