The OECD Forum on Tax Administration (FTA), comprised of the heads of 50 tax administrations, announced September 29 that it will undertake new projects designed to increase the use of joint tax audits of multinational firms and improve tax authorities’ ability to determine if there is a risk that a particular multinational is avoiding tax through manipulation of transfer pricing or permanent establishment rules.
At its 11th plenary meeting, held in Oslo, Norway on September 27–29, the FTA also released several documents, including two handbooks designed to prepare for the first exchanges of country-by-country reports under action 13 of the OECD/G20 base erosion profit shifting (BEPS) plan.
Joint audits
In a communique, the FTA said that the new project on joint tax audits will begin by assessing the experience gained by joint audits carried out to date, and examining any practical and legal obstacles to their use.
Joint audits reduce costs for multinationals and help lower the number of disputes that must be resolved through the mutual agreement procedure, the FTA said.
Risk assessment
The new FTA project on risk assessment will involve analysis of the approaches used by different countries regarding the assessment of risk as regards to transfer pricing and permanent establishment issues.
The FTA will also look at ways to capture this information and disseminate it. The purpose of the work is to help in consideration of how to maximize the effectiveness of multilateral risk assessment and, where feasible, minimize disputes, the FTA said.
Both projects complement the newly launched International Compliance Assurance Program (ICAP) program, a voluntary program designed to benefit multinationals that must file a country-by-country report. The pilot, conducted by Italy, US, UK, Spain, Austria, Germany, Netherlands, and Canada, allows MNEs to get together with multiple tax administrations to explain the contents of their country-by-country report.
The FTA said that new projects will also be undertaken on the effective use of the common reporting standard data; effective taxation of sharing and gig economy participants; enhancing the registration, identification, and authentication of taxpayers; tax debt management; online cash registers; and application programming interfaces.
Country-by-country reporting handbooks
The FTA also released two reports on country-by-country reporting, in an effort to gear up for the exchange of these reports between tax administrations next year.
One handbook, Country-by-Country Reporting: Handbook on Effective Implementation, contains practical guidance on how to implement country-by-county (CbC) reporting.
The second, Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment discusses how to make effective use of the country-by-country information for high level risk assessment purposes and includes detailed examples.
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