G20 finance ministers endorse OECD plan to open BEPS project to all countries

G20 finance ministers, during their February 26–27 meeting in Shanghai, approved an OECD-developed plan to allow all countries to participate in the implementation of base erosion profit shifting (BEPS) plan.

“To ensure a consistent global approach, we endorse the inclusive framework proposed by the OECD for the global implementation of [the] BEPS project and encourage all relevant and interested non-G20 countries and jurisdictions, which commit to implement the BEPS project, including developing countries, to join in the framework on an equal footing,” the ministers said in a statement.

The framework was announced publicly by the OECD last Tuesday and was presented in a report to the finance ministers at their meeting.

The plan allows any country to participate in further BEPS work under the framework’s mandate if the country agrees to pay an annual fee and adopt the BEPS project minimum standards on harmful tax practices (action 5), treaty abuse (action 6), country-by-country reporting (action 13), and dispute resolution (action 14).

This means that  to participate, countries would need to agree to fully implement the mutual agreement procedure (MAP) in their tax treaties and resolve MAP cases in a timely fashion; add language to their tax treaties to prevent treaty shopping; limit benefits of any intellectual property or other preferential tax regime based on an agreed method that requires substantial activity; and follow the OECD/G20 agreement on country-by-country reporting for transfer pricing.  The annual fee would be based on the the country’s economic circumstances.

The new BEPS associates would participate in standard setting, including work on transfer pricing and treaties, as well as BEPS implementation monitoring

The finance ministers also welcomed initiatives aimed at tax capacity building for developing countries, including China’s decision to establish a center for international tax policy design and research as well as technical assistance to developing economies.

Moreover, the ministers praised a new proposal by the International Monitary Fund, OECD, UN and World Bank Group to jointly develop a tax platform.

Related MNE Tax articles:

• Countries that accept BEPS minimum standards may participate in global tax effort, OECD says