ICAP multilateral tax risk assurance program applications due September 30

By Doug Connolly, MNE Tax

Multinational entities interested in participating in the first full round of the OECD Forum on Tax Administration (FTA) International Compliance Assurance Programme (ICAP) have until September 30 to submit the initial documents.

The ICAP is a voluntary program for risk assessment and assurance that can help multinationals achieve more international tax certainty and avoid disputes by coordinating conversations between the multinational group and multiple tax administrations. Participating entities must be willing to engage actively and transparently with tax administrations in the jurisdictions where they operate. The program uses the group’s country-by-country reports, master file, local files, and other transfer pricing information.

For multinational groups interested in joining the program, the parent company of the group should contact its local tax administration to discuss potential participation in ICAP in advance of the September 30 deadline.

After an application is submitted, tax administrations will have a chance to decide which risk assessments are included or excluded (e.g., because already subject to an advance pricing agreement). The timing to start each risk assessment will be agreed between the multinational group and tax administration.

Additional information on the program is available in the FTA’s ICAP handbook, published in February following a decision in December 2020 to make the program permanent. The handbook is based on experiences with the ICAP pilot programs that began in 2018 and 2019.

The FTA has also published answers to frequently asked questions from multinational groups on ICAP. In addition, the US Internal Revenue Service maintains a list of ICAP frequently asked questions for US MNEs.

Currently, a total of 22 tax administrations participate in ICAP. This includes four countries in the Americas: Argentina, Canada, Colombia, and the US. Another four participate in the Asia-Pacific region: Australia, Japan, Russia, and Singapore. Meanwhile, participation is relatively robust in Europe with 14 countries engaged: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Spain, and the UK.

For interested multinationals missing the current deadline, the next due date to participate is scheduled for March 31, 2022.