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OECD TAX TALKS
15 December 2017
14:00 – 15:00 (CET)
C EN TR E FOR TA X POL I C Y
A N D A D M I N I S T R ATI O N
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Ask questions and commentthroughout the webcast
#OECDTaxTalks
2
INTRODUCTION
A vibrant environment
4
US Tax Reform
EU List
Mandatory Disclosure Rules (EU and G7)Digital Economy
Tax for Inclusive Growth
Transparency – AEOI implementation
G20 update
5
Calendar• December 2017, Deputies meeting• March 2018, Finance Ministers• April 2018, Finance Ministers• July 2018, Finance Ministers• Nov/Dec, 2018 Leaders’ Summit
Topics• Digital Economy • BEPS Implementation• Transparency (including
update of list criteria)• Beneficial Ownership• Tax Certainty
Harmful Tax Practices
• Preferential regimes: 2017 Progress Report (Oct. 2017)– 164 regimes identified, 99 require action
including 80 in the process of being amended/abolished
– IP regimes: 52 reviewed, 27 in the process of being amended. France and Italy harmful
• Exchange of tax rulings: Peer review reports (Dec. 2017)– More than 10 000 rulings identified up to
the end of 2016, over 6 500 exchanged
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New dataviz
• Interactive map with key indicators and outcomes of the OECD work on tax
• EOIR, AEOI and BEPS
• Close to 150 countries and jurisdictions covered
• Visit: http://bit.ly/2B0lPdJ
7
Country-by-Country Reporting
Status of implementation
8
• OECD news release next week: more than 1300 exchange relationships
expected to be announced
• Will also include updates on the status of
implementation of CbCR
• Around 60 jurisdictions now have implemented an obligation for UPEs to file CbC Reports commencing in 2016 or 2017• Regular updates on our website:
http://www.oecd.org/tax/automatic-exchange/country-specific-information-on-country-by-country-reporting-
implementation.htm
• US recently signed bilateral agreements with France and Jersey, with more under
negotiation
• 67 signatories to CbCR MCAA (Bulgaria and Monaco joined in November)
• Extensive efforts to avoid / minimiseany unnecessary local filing (eg. in
cases where the Multilateral Convention is not yet in force for FY
2016 for some countries)• Recent changes: no local filing for FY
2016 in Turkey and Israel. Deadline for local filing extended (India)
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• Voluntary programme for multilateral cooperative risk assessment and assurance
• Provides increased tax certainty for MNE groups and gives tax authorities assurance that any tax risks have been identified
• Launch in Washington DC in January 2018
• Focus on TP and PE risk
• 18 month timeframe for pilot
• Learning outcomes will be incorporated into possible wider roll-out in the future
Pilot commences in January 2018 with eight participating tax administrations and MNE groups headquartered in these countries
Potential benefits include:
• More effective use of information
• More efficient use of resources
• Faster and clearer route to tax certainty
• Fewer disputes entering MAP
AustraliaItaly
NetherlandsUK
CanadaJapanSpain
US
ICAP
Topics
1. Revenue Statistics
2. Tax challenges of the digitalised economy
3. Tax treaties and BEPS multilateral instrument
4. Mutual agreement procedures
5. Mandatory disclosure rules
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REVENUE
STATISTICS
The Revenue Statistics series
• Detailed, comparative information on tax revenues
• A tool for tax policy makers & administrators which allows comparisons across countries & over time
• Main indicators: tax levels (tax-to-GDP ratio), tax structure (share of a tax in total taxation)
• 78 countries in four annual publications: OECD, Africa, Asia & Pacific Countries, Latin America & the Caribbean
12
Revenue Statistics OECD
• Released on 23 November
• Average OECD tax-to-GDP ratio: 34.3% (2016)
– A further increase from 34.0% in 2015
– Compares to 19.1% in Africa and 22.2% in LAC (2015)
• Personal income taxes increased as a share of total tax revenue (to 24.4% in 2015)
– Social security contributions & goods & service taxes decreased
– Corporate income tax revenues stayed flat
13
Tax to GDP ratio, 2016
14
Tax to GDP ratios in 2016 (as % of GDP)
OECD average
0
10
20
30
40
50
DN
K
FR
A
BE
L
FIN
SW
E
ITA
AU
T
HU
N
NLD
GR
C
NO
R
DE
U
LU
X
SV
N
ISL
ES
T
PR
T
CZ
E
PO
L
ES
P
GB
R
SV
K
NZ
L
CA
N
ISR
JP
N*
LV
A
AU
S*
CH
E
KO
R
US
A
TU
R
IRL
CH
L
ME
X
* Data for 2015
0
10
20
30
40
50
60
70
80
90
100
Personal income tax Corporate income tax Social security contributions Property taxes Taxes on goods and services Other
Tax structures, 2015
15
Tax structures in 2015 (as % of total tax revenue)
Trends in tax structures
since the financial crisis
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Cumulative percentage point change since 2007 (OECD average, % of total tax revenue)
-3
-2
-1
0
1
2
3
2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial crisis
+1.2Social Security Contributions
+0.7Personal income tax
Financial crisisFinancial crisis
+ 0.5Goods & services (incl. VAT)
- 2.3Corporate income tax
+2.0
+0.5
+0.2
Financial crisisFinancial crisisFinancial crisis
-2.4
DIGITAL
ECONOMY
Task Force on the Digital Economy
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January 2017: New TFDE mandate
April 2017: TFDE meeting
September 2017: Request for input
November 2017: Public consultation
December 2017: TFDE meeting
April 2018Delivery of the Interim
Report
Public Consultation
19
• 53 written submissions in
reply to the request for input
• Public consultation meeting
at the University of
California (Berkeley)
Over 100 people attended
Webcast – more than 2500 views
19%
46%
20%
15%
NGO/Civil society, Think Tank, Individuals
Private Sector Businesses, Business Groups, Professional groupsLaw, Accounting and Consulting firms
Academics and Universities
Breakdown of submissions
Public consultation: key messages
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1. PROBLEM DEFINITION
Need to clarify the underlying issues to be
addressed. BEPS or “broader tax challenges”?
2. BUSINESS MODELS
Support for work on the impact of digitalisation on business models & value
creation
3. BEPS IMPLEMENTATION
Good progress on VAT, but consistent implementation needed. Evidence of MNEs
responding to BEPS
LONG-TERM SOLUTIONS
Clear preference for long term multilateral solutions
and the need to avoid ring-fencing
INTERIM MEASURES
Strong concerns around short term measures, e.g.
distortions, double taxation
The Interim Report
21
1. BUSINESS MODELS
Analysis of how digitalisation is affecting
markets and business models
2. TAX POLICY DEVELOPMENTS
Assessment of the impact of BEPS measures and
overview of key measures already taken by countries
3. LONG-TERM SOLUTIONS
This chapter will aim to establish a clear sense of
direction for advancing action on long term solutions
4. INTERIM MEASURES
This chapter will consider the advantages/
disadvantages of interim measures and will aim to
minimise the harm
6. NEXT STEPS
The report will set out a concrete roadmap for future
work
5. TAX ADMINISTRATION
This chapter looks at how digitalisation can help
improve tax compliance
Next steps
22
January 2018 Inclusive Framework on BEPS
March 2018 Task Force on Digital Economymeeting
19-20 April 2018 Presentation of interim report to G20 Finance Ministers
TAX TREATIES
Trending Tax Treaty Topics
• Taxes covered by tax treaties
• Nexus/thresholds under the Model Tax Convention
• Tax certainty– Principal Purpose Test (PPT)
– Identifying most common areas of tax dispute (other than transfer pricing)
– MAP Arbitration
• Action 6 peer review
• Entry into force of the MLI
24
Model Tax Convention
25
• 2017 Update of the Model Tax Convention was adopted by the OECD Council on 21 November.
• The PDF version of the condensed 2017 Model will be released next week. The print version should be available by 19 January 2018.
• Includes all of the treaty-related BEPS measures, in both the Model and the Commentary.
• Includes other non-BEPS changes to the Articles(e.g. international traffic)
• Further guidance added to the Commentaries (including integration of pre-BEPS work on interpretation and application of the PE definition)
Entry into force of the MLI
26
• Ratification by 5 signatories required
1 2 3 4 5
MLI in force
AustriaIsle of Man
Matching Results – Provisional MLI Positions
Tax Treaties that will be updated (total tax treaties covered = 1,136)
Article 6 New Preamble 1 136
Article 7 Principal Purpose Test (PPT) 1 136
PPT + Simplified LOB > 40
Article 12 PE – Dependent agent > 170
Article 13 PE – Specific Activity ExemptionsPE – Anti-Fragmentation
> 240> 360
Article 14 PE – Splitting-up of Contracts > 110
Article 16 Mutual Agreement Procedure > 1 100
Part VI Arbitration > 160
MUTUAL AGREEMENT
PROCEDURE
Progress of peer reviews
Batch 1 and 2:
• 6 and 7 jurisdictions
• Approved and published
Batch 3:
• 8 jurisdictions
• In progress
• Approved by the FTA MAP Forum during December meeting
Batch 4:
• 8 jurisdictions
• To be launched 29 December
• Taxpayer input requested by 22 December
29
Peer review – Second batch
Main findings
Prevention of disputes
Roll-back of APAs is not
possible in 2 jurisdictions (France and
Italy)
Access to MAP
Several jurisdictions did not introduce a bilateral
consultation or notification process
before the end of the review period (France,
Luxembourg)
There is also an issue regarding access to MAP in cases where there was an audit settlement for one jurisdiction (Italy)
Resolution of MAP cases
Not all jurisdictions have adequate resources but
many of them had recent
reorganisations or an increase in staff (Austria, Germany, Italy, Luxembourg,
Sweden)
Implementation of MAP
agreements
Implementation of MAP
agreements after a given
period of time may be an issue
in several jurisdictions
30
• All but one jurisdiction (Liechtenstein) needs to
make considerable amendments to their
tax treaties
Treaty analysis
•One jurisdiction did not publish MAP guidance
and in several jurisdictions the guidance is not complete or not up-
to-date
MAP Guidance
2016 MAP statistics
http://www.oecd.org/tax/dispute/mutual-agreement-procedure-statistics.htm
Average time to close cases
32
Transfer pricing cases
33.5 months
Other cases
26.5 months
Cases started before 1 January 2016
Transfer pricing cases
2.5 months
Other cases
1.5 months
Cases started as from 1 January 2016
22.5 months
on average
All cases
0
Jurisdictions with most
MAP cases in end inventory
33
Outcomes of cases closed
in 2016
34
MANDATORY
DISCLOSURE
RULES
CRS Avoidance and
Offshore Structures
36
Evidence of CRS avoidance and use of offshore structures to obscure beneficial ownership:
• Public leaks, such as the ‘Panama’ and the ‘Paradise’ papers
• Compliance activities of tax administrations
• OECD’s CRS Disclosure Facility
• Residence by investment and pension schemes actively promoted by advisors
Bari Declaration (May 2017) calls on the OECD to look at ways to address CRS avoidance arrangements and offshore structures including consideration of model MDR inspired by the approach outlined in the BEPS Action 12 Report
MDR for CRS Avoidance Arrangements
and Offshore Structures
37
What schemes to disclose?
Who is required to disclose these schemes?
When is disclosure required?
Which information is required to be disclosed ?
Where is disclosure required?
CRS Avoidance Arrangements and Offshore Structures
Promoters and Relevant Service Providers (Intermediaries)
When scheme is made available for implementation or services are provided*
Jurisdiction where intermediary has a taxable presence
Information on scheme and users
Disclosure backed up by:• Obligations on user of the scheme to disclose where intermediary is not required or not able to disclose• Exchange of relevant information between tax administrations
Stakeholder input
38
Interested parties are invited to send their comments on the consultation draft by 15 January 2018
Comments should be sent to: [email protected]
All comments on this consultation draft will be made publicly available.
QUESTIONS?
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Ask questions and commentthroughout the webcast
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