An OECD-led coalition of 139 countries working together on cross-border tax issues known as the “Inclusive Framework on BEPS” has agreed to a new method for assessing whether countries meet global minimum standards for private tax ruling transparency, the OECD announced February 22. The new methods will apply to assessments conducted from 2021–25.
As a condition for joining the Inclusive Framework, member countries agree to follow minimum standards on international taxation adopted by OECD and G20 countries in 2015 in response to the base erosion profit shifting (BEPS) plan. The Inclusive Framework member countries must also agree to be peer-reviewed on their compliance with these standards.
One such minimum standard requires countries to disclose information to other countries information describing the content of some categories of private tax rulings issued to multinational groups. The goal of the information sharing is to allow the receiving tax authority to have a better picture of a multinational group’s operations to combat tax avoidance.
According to the OECD, the new peer review methodology applicable to tax ruling transparency is more streamlined and the peer review adopts a risk-based approach.
The OECD said that since 2017, 36,000 exchanges on more than 20,000 tax rulings have taken place under this transparency initiative.
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