OECD publishes abstracts of 11 forthcoming final BEPS reports, offering a glimpse of what’s inside

UPDATE (10/1/2015): The OECD has removed the summaries of the final BEPS reports from its website.

The OECD has published entries in its online library for the 13 final reports to be delivered under the OECD/G20 base erosion profit shifting (BEPS) plan, adding summaries of 11 reports that reveal some of the content of the coming guidance. All the reports bear a future release date of October 5.

In the final report under action 11 of the BEPS plan, concerning measuring and monitoring the scope of BEPS, the OECD states that that globally, USD 100–240 billion in corporate income tax is lost annually from BEPS. The final action 11 guidance will offer a toolkit to help countries evaluate the fiscal effects of BEPS countermeasures.

The summary of guidance under action 5, dealing with harmful tax practices, notes that countries have agreed to a framework for compulsory spontaneous exchange of information on tax rulings that could give rise to BEPS. The final BEPS report includes an analysis of a number of preferential regimes using agreed-to substantial activity and transparency factors, the abstract states.

The final report on interest deduction limits under action 4 of the BEPS plan recommends that countries adopt a fixed ratio rule based on a benchmark net interest/EBITDA ratio. At their option, countries can supplement the fixed ratio rule with a a group ratio test, which would allow some entities to deduct greater interest expense based on the situation of its worldwide group, the report says.

The abstract describing the final transfer pricing guidance under actions 8–10 states that the report discusses follow-up work to be carried out on the transactional profit split method, which will lead to guidance on the ways in which the method can appropriately be applied to further align transfer pricing outcomes with value creation.

The OECD’s 271-page final report on the digital economy details other BEPS output that addresses the tax challenges in this area, according the abstract. The final report includes a discussion of mechanisms available to allow countries to collect of VAT on cross-border business-to-consumer transactions.

While the OECD’s online library indicates that final guidance will be released under action 14, dealing with dispute resolution, and under action 15, on the multilateral instrument, abstracts of these reports are not provided.

The 13 reports covering the 15 BEPS action plan items will be delivered to the G20 finance ministers for approval at their October 8 meeting in Lima, Peru. The package will then be submitted to G20 leaders for final approval at their November 15-16 meeting in Antalya, Turkey.

See:

• Action 1 – Addressing the Tax Challenges of the Digital Economy

• Action 2 – Neutralising the Effects of Hybrid Mismatch Arrangements

• Action 3 – Designing Effective Controlled Foreign Company Rules

• Action 4 – Limiting Base Erosion Involving Interest Deductions and Other Financial Payments

• Action 5 – Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance

• Action 6 – Preventing the Granting of Treaty Benefits in Inappropriate Circumstances

• Action 7 – Preventing the Artificial Avoidance of Permanent Establishment Status

• Action 8 – 10 – -Aligning Transfer Pricing Outcomes with Value Creation, Actions

• Action 11 – Measuring and Monitoring BEPS

• Action 12 — Mandatory Disclosure Rules

• Action 13 – Transfer Pricing Documentation and Country-by-Country Reporting

• Action 14 – Making Dispute Resolution Mechanisms More Effective

• Action 15 – Developing a Multilateral Instrument to Modify Bilateral Tax Treaties