UN Committee of Experts meets to advance international tax and transfer pricing agenda

October 24, 2018 Digital Economy, Featured News, Multinational, Transfer Pricing, United Nations
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By Davide Anghileri, University of Lausanne

The influential UN Committee of Experts on International Cooperation in Tax Matters held its seventeenth session in Geneva on 16-19 October.

During the meeting, subcommittees working on various aspects of the Committee of Experts’ international tax and transfer pricing agenda provided updates on their progress and received feedback from the committee.

The following summarizes these discussions:

  • Transfer pricing: a subcommittee charged with transfer pricing work gave a short presentation on the update to the United Nations Practical Manual on Transfer Pricing for Developing Countries. The presentation was focused on financial transactions, the transactional profit split method, comparability issues, centralised procurements functions, and other minor issues. The subcommittee is focusing on eliminating overlaps and duplications in the manual to make it more readable and practical. The Committee of Experts said it will consider the addition of more examples and reviewing of existing examples, as well as adding safe harbours to the manual.
  • Dispute avoidance and resolution: A subcommittee working on tax dispute resolution issues presented the Committee of Experts with a preliminary draft of Chapter 5 (Mutual Agreement Procedure) of the proposed United Nations Handbook on Dispute Avoidance and Resolution. The committee stressed that the handbook should contain practical guidance for non-experts and should have neutral language when referring to the OECD/G20 base erosion profit shifting (BEPS) plan Action 14 minimum standards and best practices, without suggesting any recommendations. The Committee of Experts approved of the ongoing work of the subcommittee, which intends to gradually deliver all chapters for final approval in 2021. The subcommittee said that each chapter will be preliminarily discussed before approved.
  • Extractive industries: a subcommittee working on extractive industries issues discussed the latest on a handbook being prepared for developing countries. The subcommittee has reached consensus on developing of seven new chapters, following Committee on Experts guidelines, as follows: auditing of oil, gas, and mining activities; tax treatment of subcontractors and service providers; production sharing contracts; environmental tax issues; tax incentives in the extractive industry; tax treatment of financial transactions (including a sub-chapter on farm in/out); and trade mispricing – misinvoicing (differences between the two). A paper discussing the subcommittee’s work was prepared for the meeting.
  • Taxation of development projects: the Committee of Experts decided to establish a subcommittee on the tax treatment of official development assistance projects under the coordination of Marlene Patricia Nembhard-Parker. The subcommittee’s mandate is to update and finalize 2007 draft guidelines on the tax treatment of ODA projects. A paper on the taxation of development projects was prepared for the meeting.
  • Environmental tax issues: a subcommittee addressing environmental tax issues presented the Committee of Experts with a summary outline of a paper it was developing on carbon taxation. The committee stressed that the paper should provide practical guidance rather than be a theoretical paper.
  • Digital economy: the digital economy subcommittee discussed a draft questionnaire for tax administrations and the business sector designed to gather information on tax issues related to the digitalization of the economy. The subcommittee’s aim is to address the allocation of taxing rights in the digital economy. The questionnaire is under review by the subcommittee and will be released soon.
  • Negotiation of tax treaties: a subcommittee working on a revised draft of the Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries discussed ongoing work. A paper was prepared for the meeting.
  • Provisional agenda for next meeting: the committee agreed that the Eighteen Session of the Committee of Experts on International Cooperation in Tax Matters will be held in New York on 22-25 April. The Committee agreed that the additional topic of the relationship between tax treaties and investments treaties will be addressed at the meeting. A meeting in Geneva will take place 15–18 October 2019.

The following additional documents were released by the Committee of Experts for this meeting:

  • Summary of the United Nations Practical Portfolio on Protecting the Tax Base of Developing Countries against Base Erosion: Income from Services (E/C.18/2018/9)
  • Summary of the Practical Portfolio on Protecting the Tax Base of Developing Countries against Base-eroding Payments: Interest (E/C.18/2018/10)
  • International tax evasion and avoidance schemes, including the use of shell companies (E/C.18/2018/CRP.17)
  • The Role of Taxation and Domestic Resource Mobilization in the Implementation of the Sustainable Development Goals (E/C.18/2018/CRP.19)
Davide Anghileri

Davide Anghileri

Researcher and lecturer at University of Lausanne

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.

Davide can be reached at [email protected].

Davide Anghileri
Davide can be reached at [email protected].

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