OECD Tax Talk #7 - 17 October 2017

Automatic exchange of information

Pascal Saint-Amans started the tax talk with the announcement that the automatic exchange of information (AEOI ) had been successfully launched. Developments in this area were also recognised by the G20 Finance Ministers when they met in Washington DC on 12-14 October 2017. 49 countries have implemented the AEOI so far. 53 more will follow in September 2018. The review process, which is currently being prepared, will then start in 2020.

On the other hand, the review process of the Exchange of information on request (EOIR) is already under way. The report on the first group of countries was published in August 2017. Only three of the ten countries have been classified as "compliant" (Ireland, Mauritius and Norway), but on the other hand, only one country was classified as "partially compliant", namely Jamaica. However, Jamaica has already committed itself to enacting new legislation to become "largely compliant".

Achim Pross informed about the status of Country-by-Country Reporting (CbCR). The deadline for submitting the reports will soon end on 31 December 2017 and the first exchanges shall take place in June 2018. In addition, more than 1'000 bilateral exchange relations have been established within the framework of the "Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports" (CbCR MCCA), as countries are free to set up the CbCR bilaterally or within the framework of the Multilateral Arrangement. 65 countries have signed the Multilateral Agreement so far. Furthermore, 40 countries have decided to introduce Master and Local Filing, which are not actually part of the minimum standard. Finally, Achim Pross referred to the guidelines and instructions published on this subject at the 11th meeting of the OECD Forum on Tax Administration in Oslo.

Digital Economy

At the G20 meeting in Washington DC, the challenge of the digital economy was also discussed. Giorgia Maffini provided information on the consultation process currently underway on this topic. From 22 September 2017 to 13 October 2017, companies, law firms, accounting firms, civil society and academics were able to submit written comments. They received over 50 such submissions. The second step of the consultation process will be a meeting of all stakeholders on 1 November 2017 in Berkeley (San Francisco, USA), which can be followed via webcast. The consultation process will, among other things, identify how digitalisation has affected business models and how the BEPS project has changed the behaviour of companies. It also aims to work out how best to deal with the tax challenges in a digital economy. The results will be presented in an interim report to the G20 finance ministers in April 2018.

Preferential Tax Regimes

Achim Pross provided information on the review process regarding privileged tax regimes, which is part of Action Point 5 (Harmful Tax Practises). A first report, in which 164 countries were reviewed, was published on 16 October 2017. Two countries classified as "harmful" stand out: France and Italy. While Italy will apparently correct the critical tax regime in the near future, France has an unchanged and harmful IP system. For nine countries the review process is still pending. But all in all, Achim Pross speaks of a success story because the Nexus Approach is now implemented correctly all around the world.

Multilateral Instrument (MLI)

Sophie Chatel gave a short update on the Multilateral Instrument. So far, 71 countries have signed the MLI and other countries have announced their intention to join the MLI. In order for the MLI to enter into force, however, it will take at least 5 countries to ratify it. Sophie Chatel was pleased to announce that Austria was the first country to ratify the MLI and hopes that four more countries will ratify it by the end of 2017, so that it can then enter into force three months later, at the beginning of 2018.

Tax Certainty

With regard to Tax Certainty, Achim Pross focused on the so-called "International Compliance Assurance Program" (ICAP) this time, which is based on Action Point 13 and partly on Action Point 14. It is a voluntary program which aims to bring the following benefits to multinational companies:

The ICAP intends to provide companies with a rapid assurance from several tax authorities regarding withholding tax and other possible risks. The pilot program will start in seven countries (Australia, UK, Italy, Canada, Netherlands, Spain, USA) in January 2018 and about 12 months later the results of this program will be analysed.

Caroline Malcom informed about the review process regarding action item 14 (Dispute resolution). The report on the first group of countries (including Switzerland) was published at the end of September 2017. The report on the second group of countries is due to be published before the end of 2017 and the review of the third group of countries is already underway. Caroline Malcom also encouraged taxpayers to participate in the review process with inputs. In addition, the "2016 MAP statistics" are due to be published in November 2017, where she promises better quality and more consistent data thanks to the new framework.

Conclusion

Finally, Pascal Saint-Amans called attention to the fifth "OECD Forum on Tax and Crime", which will take place in London from 7 to 8 November 2017. According to Pascal Saint-Amans, one can see that they are still "pretty active". He finished the webinar saying that he hoped to see some of the attendees again in San Francisco and that maybe there would be another webinar before the end of the year (2017).