OECD – Substantial Activities in No or Only Nominal Tax Jurisdictions: Guidance for the Spontaneous Exchange of Information
Substantial Activities in No or Only Nominal Tax Jurisdictions: Additional Guidance for the Spontaneous Exchange of Information and Opt-in Notification Template. The Forum on Harmful Tax Practices (FHTP) agreed at its meeting on 15 – 19 October 2018 on the resumption of the application of the substantial activity factor to no or only nominal tax jurisdictions (hereafter the “Standard”, approved by the Inclusive Framework in November 2018). The Standard requires no or only nominal tax jurisdictions to exchange information in specified situations. The Standard already includes details as to the circumstances giving rise to exchange, the data points included in the exchange, and the jurisdictions to be exchanged with, summarised in Annex A. Building on that work, this document adresses the practical modalities regarding the exchange of information requirements of the Standard. Part 1 contains guidance on the timelines, the international legal framework and clarifications on the key definitions: a. Applicable timelines: The applicable timeline for conducting the exchanges varies depending on whether the information is Exchanged as a result of non-compliance with the substantial activity requirements or in other situations. b. Legal mechanism to operationalise the exchange process: The exchanges occur as spontaneous exchange of information (SEOI) under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Convention), or where bilateral tax agreements are used, under applicable Tax Information Exchange Agreements or bilateral tax treaties that permit SEOI. In order to operationalise the exchanges, a standardised opt-in template has been developed, by which potential recipient jurisdictions notify their interest in receiving the respective information and that the information is foreseeably relevant for the administration of the recipient jurisdiction’s taxes (see Annex F).c.Key definitions: Relevan t definitions for the exchange framework have been developed. Part 2 contains the format for the exchanges. The Standard foresees that a stand ardised template and XML schema will govern the spontaneous exchanges pursuant to the Standard. The document also includes in Annex A an extract of the Standard relevant to the issues addressed, in Annexes B – E templates for the exchanges which are the basis for the XML Schema and in Annex F the opt-in notification template for the exchanges under the Standard.