OECD officials discuss plans for international tax agenda

by Julie Martin

OECD Officials today provided an update of the OECD’s international tax work during their latest “Tax Talks” webinar. Here are some highlights:

• Pascal Saint-Amans, director of the OECD’s centre for tax policy and administration, said the OECD will publish next week information on over 1300 country-by-country reporting exchange relationships and provide an update on country-by-country reporting implementation. He said the OECD seeks to minimize MNEs’ local filing burdens. He noted that the US and France signed a joint statement last week agreeing there will be no local filing in France for US companies and noted that India extended its local filing deadline until April.

• Saint-Amans said the voluntary International Compliance Assurance Program or ICAP pilot program will launch in January in Washington DC, focusing and transfer pricing and permanent establishment (PE) risks. Australia, Italy, Netherlands, UK, Spain, US, Canada, and Japan are participating; France is an observer. Saint-Amans said the program may be extended after the trial. “This can be a game changer for the audit and risk assessment of multinational companies through a multilateral approach, which would minimize the risk, minimize the cost of compliance [for MNEs], and for tax administrations, minimize the cost of operating,” Saint-Amans said.

• Sophie Chatel, Head of the OECD’s Tax Treaty Unit, reported that the 2017 update of the OECD Model Tax Convention will be released in next week. The Blue Book will be available mid-January.

• Chatel said the OECD is discussing how to determine what taxes are covered by tax treaties. The issue is gaining attention as countries are consider different sorts of taxes as short-term fixes addressing the digital economy. Chatel said the OECD also seeing if it can enhance tax certainty regarding the application and interpretation of the principal purpose test for tax treaties. Another topic being discussed is whether PE definitions should be updated to address the digitalization of the economy.

• Chatel said she expects more countries will soon ratify the BEPS multilateral instrument (MLI), noting that Poland is very close. Of 1136 tax treaties covered by the MLI, all would add a principal purpose test and the revised preamble required by the BEPS minimum standards. The uptake of the MLI’s PE provisions is not as great: 110 treaties add PE provisions on splitting up contracts, 170 incorporate the dependent agent PE provisions, 240 adopt the new specific activity exemptions, and 360 add antifragmentation rules. Chatel said only 160 treaties incorporate mandatory binding arbitration, though she predicted this number will increase in time. She also said the BEPS Action 6 minimum standard peer review will begin next year.

• Sandra Knaepen OECD Head of Mutual Agreement Procedure Unit, provided an overview of outcome of the second batch of MAP peer reviews, released today, assessing Austria, France, Germany, Italy, Liechtenstein, Luxembourg, and Sweden. Knaepen said competent authorities have begun to increase their staff in response to these MAP peer reviews. The data shows that many competent authorities are unable to meet the goal of resolving MAP cases within 24 months, though, she said.

The next OECD Tax Talks webinar will be broadcast either late January or February 2018.

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Julie Martin

Founder & Editor at MNE Tax

Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.

Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.

Julie can be reached at [email protected].

@mnetax

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Julie can be reached at [email protected].