Nine tax policy experts, including former government officials, tax professors, and a Nobel Prize winner in economics, in a report published June 2, recommended far-reaching reforms to the system of taxing multinational corporations, arguing that the current system is “broken” and must be changed. The group, headed by José Antonio Ocampo, former United Nations . . .
The annual meetings of the UN Committee of Experts on International Cooperation in Tax Matters should be moved from Geneva to New York to allow greater stakeholder input and better coordination of UN operations, the UN Secretary-General. . .
The US IRS, on February 17, announced updates to the FATCA International Data Exchange Service (IDES) user guide, including a revised data preparation section and more instructions. The IRS also said that an IDES sample test file has been added to the IDES Data File Preparation page and has scheduled a FATCA IDES open testing session for financial institutions and tax . . .
The European Commission on February 3 opened a state aid investigation into the private ruling practices of the Belgian tax administration. The rulings allow multinational entities in Belgium to reduce their corporate tax liability by “excess profits” that allegedly result from the advantage of being part . . .
The EU Council, on January 27, amended the EU parent-subsidiary directive, adding a new antiavoidance rule. The action follows up on a political agreement reached on December 9 to amend the directive. The directive exempts from taxation dividends and other profit distributions received by parent companies from subsidiaries located in different member states. The amended directive provides that tax exemptions for . . .
The OECD on December 19 released a discussion draft proposing significant revisions to the OECD transfer pricing guidelines to address base erosion and profit shifting (BEPS). The draft seeks to provide a more accurate delineation of related party transactions, provides guidance on the relevance and allocation of risk, and provides for the recharacterization of transactions in some cases. The draft also sets out five “special measures,” including . . .
Ireland may not support a proposal advanced by the UK and Germany to use a modified nexus approach to put limits on preferential intellectual property tax regimes under the OECD/G-20 base erosion profit shifting (BEPS) plan, Finance Minister Michael Noonan said December 2. The joint UK/German proposal, announced by the . . .
The OECD on October 28 published comments received in response to its discussion draft, “Transfer Pricing Comparability Data and Developing Countries,” including an appeal by the World Bank Group to the OECD to develop guidance on the use of foreign comparables . . .
G20 finance ministers, in a communique released following their Sept. 20-21 meeting in Carins, Australia, have expressed approval of the progress made toward completion of the G20 OECD Base Erosion and Profit Shifting (BEPS) Action Plan and have committed to finalizing all action items by 2015. Further, the ministers endorsed the finalized global Common Reporting Standard for automatic exchange of tax information, committing to exchange of information by 2017 or end-2018, subject to the completion of legislative procedures. Communique. See also, G20 release, prior coverage of BEPS recommendations.
UK formally commits to country-by-country reporting template: The UK has agreed to implement the country-by-country reporting template provided for in the OECD/G20 BEPS recommendations, Financial Secretary to the Treasury David Gauke announced in a Sept. 20 release. See, UK release.
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India disputes binding arbitration proposals in BEPS recommendations: In a Sept. 22 speech before the G20, India’s Minister of State for Finance expressed support for the OECD/G20 BEPS project but said that developing nations had “major concerns” with proposals to introduce binding arbitration into the mutual agreement procedure for tax treaties. See, speech of Smt. Nirmala Sitharaman, India Minister of State for Finance. See, related coverage.
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The OECD and Global Forum announce mandate to assist developing nations with BEPS: The OECD and its Global Forum on Transparency and Exchange of Information announced on Sept. 22 that they have been mandated by the G20 to develop toolkits to support developing countries in addressing BEPS and to launch pilot projects to assist them to move towards automatic exchange of information. The OECD said it will report to the G20 Leaders in November on its plan to deepen the involvement of developing countries in the OECD/G20 BEPS project and ensure that their concerns are addressed. OECD release.
EY, on August 8, announced that Jay Nibbe will take over as Global Vice Chair for Tax. Nibbe will lead more than 35,000 tax professionals around the world. Release
An OECD report, released August 1, identifies the main sources of base erosion and profit shifting (BEPS) in developing countries and the extent to which the OECD/G20 Action Plan addresses these concerns.
After interviewing developing nation officials. . .
The OECD has published 68 comments to its discussion draft on neutralizing the effect of hybrid mismatch arrangements. The draft is the OECD’s response to Action 2 of its base erosion and profit shifting plan. Commentators include large multinationals, banks, insurance companies, accounting and law firms, and NGOs. The OECD will hold a hearing on the discussion draft on May 15, which will be broadcast live over the internet. Press Release, Public Comments (10.17MB)
The OECD has released a discussion draft addressing action 6 of its base erosion and profit shifting initiative. Source: OECD Press Release, OECD Draft on Preventing Treaty Abuse
Analysis: KPMG, Skadden, Arps, Slate, Meagher & Flom LLP , Osler, Hoskin & Harcourt LLP, EY
Germany had the greatest number of unresolved mutual agreement procedure (MAP) cases among OECD countries during the 2014 reporting period, according to OECD statistics . . .
The European Court of Justice on February 3 ruled that a UK law that puts restrictions on the ability of group companies to offset gains with nonresident subsidiary losses is compatible with EU law, rejecting the European Commission’s claim that the law made it “virtually impossible” . . .
The OECD on January 20 published 65 comment letters on proposed amendments to the OECD transfer pricing guidelines that would provide for elective, simplified, rules for determining the amount of low value-adding intra-group services to be charged to and paid for by individual members of an MNE group. The draft, released November 3, 2014, responds . . .
An OECD discussion draft scheduled to be released this week includes a proposal to put limits on an MNE’s net interest deductions based on worldwide net third party interest expenses, OECD officials said December 15 during a webcast updating work on the OECD/G20 base erosion and profit shifting (BEPS) project. Officials also said that the OECD intends . . .
The European Court of Justice on November 13 ruled that UK legislation that immediately attributes gains made by non-resident closely held companies to participators of the companies that are UK residents is a restriction on the free movement of capital as defined . . .
The Council of the European Union, on July 8, formally adopted an amendment to the parent-subsidiary directive to prevent multinational groups from achieving double non-taxation from hybrid loan arrangements. A political agreement on the matter was reached on June 20. States have until December 31, 2015, to add the amendment to their laws. Press release; Amendment to Council Directive: 10996/14, 11291/14, 11291/14 ADD1; Prior coverage
The VAT Expert Group, charged with assisting and advising the European Commission
The European Commission, in a June 5 announcement, has requested applications from value added tax (VAT) specialists to serve on the Commission’s VAT Expert Group . . .
OECD and the United Nations Development Programme (UNDP) officials on July 13 formally announced the launch of the Tax Inspectors Without Borders program at the UN’s Third International Conference on Financing for Development held in Addis Ababa, Ethiopia. The new program recruits currently serving or recently retired . . .
The World Customs Organization (WCO) has a published a guide for customs officials designed to move the debate forward on the issue of the harmonization of customs valuation and transfer pricing valuation.The guide . . .
Tax officials from 21 Asia Pacific countries and organizations attended an OECD regional network meeting on base erosion and profit shifting (BEPS) designed to give more nations a voice in the development of OECD/G20 base erosion profiting shifting (BEPS) plan output. The meeting, held February 12–13 in Seoul, also . . .
Countries can legally use a multilateral instrument to amend existing bilateral tax treaties to implement the OECD’s base erosion and profit shifting (BEPS) initiative, Pascal Saint-Amans, Director, OECD Center for Tax Policy and Administration, said on May 26, during an update of OECD progress on the BEPS action plan.
Saint-Amans said that a team of international lawyers have found legal precedent in areas other than tax . . .
G20 finance ministers and central bank governors, in a communique released following their September 5 meeting in Ankara, Turkey, called on the OECD to establish a framework by early 2016 on the implementation of OECD/G20 base erosion and profit shifting (BEPS) plan . . .
Update: See also: OECD Secretary-General Report To G20 Finance Ministers
Senior OECD officials defended draft changes to the OECD transfer pricing guidelines on risk, recharacterization, and special measures February 12, arguing that revisions to the guidelines are needed to strengthen the arm’s length principle and to properly align a transaction’s form with its substance. The discussion draft, released December 19, proposes significant . . .
The UN Subcommittee on Base Erosion and Profit Shifting (BEPS), on July 8, extended the deadline for developing countries to respond to a questionnaire on BEPS.
The subcommittee, established by the UN Committee of Experts . . .
The OECD’s Working Party 6 has tentatively decided on a number of modifications to the OECD’s discussion draft on transfer pricing documentation and country-by-country reporting, including the elimination of entity-by-entity reporting in favor of country-level reporting, said Joseph Andrus, head of OECD transfer pricing , on April 2 during a webcast updating the base erosion and profit shifting (BEPS) initiative. Pascal Saint Amans, the OECD’s director of tax work, said that BEPS deliverables were “on track” for 2014 and that work has already begun on 2015 deliverables. . .
The EU Parliament on November 25 overwhelmingly approved wide-ranging proposals to overhaul Europe’s international tax system offered by a special Parliament committee investigating multinational . . .
UPDATE (11/26/2015): EU Parliament to establish new committee on tax rulings: The EU Conference of Presidents on November 26 decided to set up a six-month committee to follow up on the tax rulings committee’s work; the precise mandate of the new committee will be decided on Wednesday. See: Release.
UPDATE (12/02/2015): New EU Parliament tax committee will have same mandate as its predecessor: The European Parliament on December 2 voted to create a new committee to investigate tax rulings, specifying that the new committee will have the . . .
India’s Competent Authority Akhilesh Ranjan discusses mandatory arbitration, country-by-country reporting, other BEPS topics with Mukesh Bhutani of BMR Advisors and Arun Giri of Taxsutra in a report published in The Firm on September 7. See: The Firm.
The OECD on June 15 released public comments from 60 organizations on a revised discussion draft under action 7 of the OECD/G20 base erosion and profit shifting (BEPS) plan concerning artificial avoidance of permanent establishment (PE) status. The comments, numbering 319 pages, generally express . . .
The European Commission has been forced to delay decisions on whether countries violated state aid rules by granting private tax rulings to Amazon, Apple, Fiat, and Starbucks, EU competition commissioner, Margrethe Vestager, said May 5 . . .
The OECD on March 31 released a discussion draft under the OECD/G20 base erosion profit shifting (BEPS) plan providing recommendations to tax administrations on how to structure mandatory disclosure rules to address aggressive tax planning. Included are recommendations on how to deal with international . . .
A joint proposal advanced by the UK and Germany that put limits on preferential intellectual property regimes has been adopted by the OECD Forum on Harmful Tax Practices (FHTP) as a new starting point for drafting guidance under Action 5 the base erosion profit shifting (BEPS) plan, UK Financial Secretary to the Treasury, David Gauke said December 2. Gauke said the UK/German proposal . . .
German, French, and Italian finance ministers have asked the EU Commission to take immediate steps to more aggressively tackle corporate tax avoidance in the EU. In a letter addressed to European economy, finance and tax commissioner Pierre Moscovici . . .
The OECD on November 21 released a discussion draft under Action 6 of the OECD/G20 base erosion and profit shifting (BEPS) plan relating to preventing abuse of tax treaties. The draft follows up on an OECD interim report, issued September 16, which reflects an agreement among countries to require minimum standards in tax treaties to prevent treaty abuse. The report states that treaties should include either a principle . . .
European Commission President Jean Claude Juncker on November 12 said advance tax rulings issued by Luxembourg to multinationals while he was the country’s prime minister were legal even though the rulings helped multinationals avoid tax due other European nations. Juncker was responding the uproar over the release of leaked taxpayer private rulings and tax returns which were . . .
The European Court of Justice (ECJ), on June 12, ruled in SCA Group Holding BV and other joined cases that the Netherlands may not deny single entity tax treatment to a resident parent company and its indirectly held Dutch subsidiary (sub-subsidiary) in cases where the sub-subsidiary’s parent is a not a Dutch . . .
-For implications of the ECJ opinion on Spain’s rules governing tax consolidation, see a June 17 report by EY
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