Home > Tax Policy > Papers by topic > International transactions

International transactions

- eg, tax havens; withholding taxes; transfer pricing; taxes on non-residents
- see also Concessions; Corporations

BEPS Action 5 harmful tax practices peer review transparency framework

OECD (February 2017). The OECD  has released key documents, approved by the Inclusive Framework on BEPS, which will form the basis of the peer review of the Action 5 transparency framework. The Action 5 standard for the compulsory spontaneous exchange of information on tax rulings (the “transparency framework”) is one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the minimum standards and participating in the peer reviews. The documents released form the basis on which the peer review processes will be undertaken. The compilations include the Terms of Reference which sets out the criteria for assessing the implementation of the minimum standard, and the Methodology which sets out the procedural mechanism by which jurisdictions will complete the peer review, including the process for collecting the relevant data, the preparation and approval of reports, the outputs of the review and the follow-up process.


BEPS Action 13 on country-by-country reporting peer review documents

OECD (February 2017). The OECD has released key documents, approved by the Inclusive Framework on BEPS, which will form the basis of the peer review of Action 13 Country-by-Country Reporting. The Action 13 standard on Country-by-Country Reporting is one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework on BEPS commit to implementing the minimum standards and participating in the peer reviews. The compilation includes the Terms of Reference which sets out the criteria for assessing the implementation of the minimum standard, and the Methodology which sets out the procedural mechanism by which jurisdictions will complete the peer review, including the process for collecting the relevant data, the preparation and approval of reports, the outputs of the review and the follow-up process.


Limiting base erosion involving interest deductions and other financial payments, Action 4 – 2016 update

OECD (December 2016). The mobility of money makes it possible for multinational groups to achieve favourable tax results by adjusting the amount of debt in a group entity. The 2015 Report established a common approach which directly links an entity’s net interest deductions to its level of economic activity, based on taxable earnings before interest income and expense, depreciation and amortisation (EBITDA). This approach includes three elements: a fixed ratio rule based on a benchmark net interest/EBITDA ratio; a group ratio rule which allows an entity to deduct more interest expense based on the position of its worldwide group; and targeted rules to address specific risks. Further work on two aspects of the common approach was completed in 2016. The first addressed key elements of the design and operation of the group ratio rule, focusing on the calculation of net third party interest expense, the calculation of group-EBITDA and approaches to address the impact of entities with negative EBITDA. The second identifies features of the banking and insurance sectors which can constrain the ability of groups to engage in BEPS involving interest, together with limits on these constraints, and approaches to deal with risks posed by entities in these sectors where they remain.


BEPS Action 6: discussion draft on non-CIV examples

OECD (December 2016).  A discussion draft on the follow-up work on the interaction between the treaty provisions of the report on BEPS Action 6 and the treaty entitlement of non-CIV funds.


OECD work on taxation

OECD (October 2016). 2016/2017 brochure outlining the OECD’s work on tax.


OECD Secretary-General report to the G20 Finance Ministers and Central Bank Governors

OECD (October 2016). This report consists of two parts.  Part 1 is a Progress Report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes.  Part II is an update report by the OECD Secretary-General regarding tax transparency, with a focus on beneficial ownership information.


Mind the gap: the arms length principle and MNE value creation

Melissa Ogier, Tax and Transfer Policy Institute (September 2016). Multinational enterprises (MNEs) operating by way of wholly owned subsidiaries are responsible for an increasing percentage of global trade. This paper looks at how the existing rules based on the arm’s length principle allocate a MNE’s profit between the taxing jurisdictions in which it operates.


OECD Secretary-General report to G20 leaders

OECD (September 2016).


Comments received on public discussion draft BEPS Action 7: additional guidance on the attribution of profits to permanent establishment Part 1

OECD (September 2016).


Comments received on public discussion draft BEPS Action 7: additional guidance on the attribution of profits to permanent establishments Part 2

OECD (September 2016).


Comments received on public discussion draft BEPS Action 8-10: revised guidance on profit splits Part 1

OECD (September 2016).


Comments received on public discussion draft BEPS Action 8-10: revised guidance on profit splits Part 2

OECD (September 2016).


BEPS Action 2 branch mismatch structures

OECD (August 2016).  A discussion draft which deals with branch mismatch structures under Action 2 (Neutralising the Effects of Hybrid Mismatch Arrangements) of the BEPS Action Plan. The Report on Neutralising the Effects of Hybrids Mismatch Arrangements (Action 2 Report) sets out recommendations for domestic rules designed to neutralise mismatches in tax outcomes that arise in respect of payments under a hybrid mismatch arrangement. The recommendations in Chapters 3 to 8 of that report set out rules targeting payments made by or to a hybrid entity that give rise to one of three types of mismatches:

  • deduction / no inclusion (D/NI) outcomes, where the payment is deductible under the rules of the payer jurisdiction but not included in the ordinary income of the payee;
  • double deduction (DD) outcomes, where the payment triggers two deductions in respect of the same payment; and
  • indirect deduction / no inclusion (indirect D/NI) outcomes, where the income from a deductible payment is set-off by the payee against a deduction under a hybrid mismatch arrangement.

A way forward on corporate tax reform

Alan D. Viard and Eric Toder, Urban Brookings Tax Policy Center (August 2016). The US tax rate is the highest in the developed world, it collects less corporate tax revenue as a share of gross domestic product than many of its trading partners. The tax both discourages firms from investing in the US and enables multinationals to avoid tax by reporting profits in low-tax countries.
The problem is that the US can impose corporate tax only on income companies earn within its borders and income of companies legally based in the US. Unfortunately, the geographic source of a company’s income and its legal residence are not economically meaningful concepts, which makes it easy for companies to avoid taxes.


BEPS Action 4: approaches to address BEPS involving interest in the banking and insurance sectors

OECD (August 2016). The report on Action 4, Limiting Base Erosion Involving Interest Deductions and Other Financial Payments, establishes a common approach to tackling BEPS involving interest, but highlights a number of factors which suggest that a difference approach may be needed to address risks posed by entities in the banking and insurance sectors. These include the fact that banks and insurance companies typically have net interest income rather than net interest expense, the different role that interest plays in banking and insurance compared with other sectors, and the fact that banking and insurance groups are subject to regulatory capital requirements that restrict the ability of groups to place debt in certain entities. The Report therefore provides at paragraphs 188 to 190 that countries may exclude entities in banking and insurance groups, and regulated banks and insurance companies in non-financial groups, from the scope of the fixed ratio rule and group ratio rule, with work to be conducted in 2016 to identify approaches suitable for addressing the BEPS risks posed by these sectors, taking into account their particular characteristics.


Lax SEC reporting requirements allow companies to omit over 85 percent of their tax haven subsidiaries

Citizens for Tax Justice (July 2016). Fortune 500 companies are holding $2.4 trillion offshore as “permanently invested” profits.  By shifting US profits to foreign subsidiaries and declaring them to be permanently reinvested, corporations can avoid paying US taxes on these earnings indefinitely.


OECD Secretary-General report to G20 Finance Ministers

OECD (July 2016). This report consists of two parts. Part I is a report by the OECD Secretary-General regarding (a) the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project; (b) tax transparency; (c) tax policy tools to support sustainable and inclusive growth; and (d) tax and development.  Part II is an updated Progress Report to the G20 by the Global Forum on Transparency and Exchange of Information for Tax Purposes.


Tax policy and international cooperation and assistance for the achievement of human rights

RightingFinance (July 2016). This is the fourth in a series of advocacy tools produced by RightingFinance to assist education and dissemination of standards on tax policy and human rights contained in a report produced by the UN Special Rapporteur on Extreme Poverty and Human Rights.


Taxing multinational enterprises as unitary firms

Sol Picciotto, International Center for Tax and Development (June 2016). This paper explores the issues raised for international tax rules of explicitly treating multinational enterprises (MNEs) as single or unitary firms. It first briefly explains why reform of international corporate taxation is important particularly for developing countries, then outlines the flaws in the current system.


BEPS Action 15: development of a multilateral instrument to implement the tax treaty related BEPS measures

OECD (May 2016). Public comments are invited on technical issues identified in a request for input related to the development of a multilateral instrument to implement the tax-treaty related BEPS measures.


Treaty entitlement of non-CIV funds

OECD (March 2016). Public discussion draft on the policy considerations relevant to the treaty entitlement of investment vehicles that do not qualify as “collective investment vehicles” within the meaning of the 2010 OECD Report The Granting of Treaty Benefits with Respect to the Income of Collective Investment Vehicles. 


Financial transaction taxes in theory and practice

Leonard E Burman, William G Gale, Sarah Gault, Bryan Kim, Jim Nunns and Steven Rosenthal, Urban Brookings Tax Policy Center (February 2016). This paper explores issues related to a financial transaction tax (FTT) in the United States. It traces the history and current practice of the tax in the United States and other countries, reviews evidence of its impact on financial markets, and explores the key design issues any such tax must address. It presents new revenue and distributional effects of a hypothetical relatively broad-based FTT in the United States, finding that, at a base rate of 0.34 percent, it could raise a maximum of about 0.4 percent of GDP ($75 billion in 2017) in a highly progressive manner. Originally published in National Tax Journal, March 2016, 69 (1), 171–216.


‘Still Broken’ Governments Must Do More To Fix The International Corporate Tax System

Tax Justice Network, Oxfam, Global Alliance for Tax Justice and Public Services International (November 2015). Overall it is estimated that, in order to reduce their tax bills, US multinationals shifted between $500 and 700 billion—a quarter of their annual profits—out of the United States, Germany, the United Kingdom and elsewhere to a handful of countries including the Netherlands, Luxembourg, Ireland, Switzerland and Bermuda in 2012. In the same year, US multinational companies reported US$ 80 billion of profits in Bermuda – more than their profits reported in Japan, China, Germany and France combined.

Claire Godfrey, head of policy for Oxfam’s Even it Up Campaign said: “Rich and poor countries alike are haemorrhaging money because multinational companies are not required to pay their fair share of taxes where they make their money. Ultimately the cost is being borne by ordinary people – particularly the poorest who rely on public services and who are suffering because of budget cuts.”

Rosa Pavanelli, general secretary of Public Services International said: “Public anger will grow if the G20 leaders allow the world’s largest corporations to continue dodging billions in tax while inequality rises, austerity bites and public services are cut.”

The G20 Heads of State are expected to consider a package of measures they claim will address corporate tax avoidance at their annual meeting in Turkey on 15 and 16 November.

Alex Cobham, director of research at Tax Justice Network, said: “The corporate tax measures being adopted by the G20 this week are not enough. They will not stop the race to the bottom in corporate taxation, and they will not provide the transparency that’s needed to hold companies and tax authorities accountable. It’s in the G20’s own interest to support deeper reforms to the global tax system.”

Twelve countries – the United States, Germany, Canada, China, Brazil, France, Mexico, India, UK, Italy, Spain and Australia – account for roughly 90 percent of all missing profits from US multinationals. For example, US multinationals make 65 percent of their sales, employ 66 percent of their staff and hold 71 percent of their assets in America but declare only 50 percent of their profits in the country.

While G20 countries lose the largest amount of money, low income developing countries such as Honduras, the Philippines and Ecuador are hardest hit because corporate tax revenues comprise a higher proportion of their national income. It is estimated, for example, that Honduras could increase healthcare or education spending by 10-15 percent if the practice of profit shifting by US multinationals was stopped.


OECD G20 BEPS Explanatory Statement 2015 Final Reports

OECD (October 2015).  International tax issues have never been as high on the political agenda as they are today. The integration of national economies and markets has increased substantially in recent years. This has put a strain on the  international tax framework, which was designed more than a century ago. The current rules have revealed weaknesses that create opportunities for Base Erosion and Profit Shifting (BEPS), thus requiring a bold move by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created. In September 2013, G20 Leaders endorsed the ambitious and comprehensive Action Plan on BEPS. This package of 13 reports, delivered just 2 years later, includes new or reinforced international standards as well as concrete measures to help countries tackle BEPS. It represents the results of a major and unparalleled effort by OECD and G20 countries working together on an equal footing with the participation of an increasing number of developing countries.


Financial Transaction Taxes in Theory and Practice

Leonard E. Burman, William G. Gale, Sarah Gault, Bryan Kim, Jim Nunns, Steven Rosenthal, Urban Brookings Tax Policy Center (June 2015). In response to the financial market crisis and GFC, there has been a resurgence of interest in financial transaction taxes (FTTs) around the world. The Tax Policy Center estimates that a well-designed FTT could raise about $50 billion per year in the United States and would be quite progressive. We discuss the effects of an FTT on various dimensions of financial sector behaviour and its ambiguous effects on economic efficiency


BEPS Action 13: country-by-country implementation package

OECD (June 2015). The OECD has released a package of measures for the implementation of a new Country-by-Country Reporting plan developed under the OECD/G20 BEPS Project.


Discussion Draft BEPS Action 8: Hard-to-value intangibles

OECD (June 2015). Action 8 of the BEPS Action Plan (“Assure that transfer pricing outcomes are in line with value creation: Intangibles”) identifies that work needs to be undertaken to develop “transfer pricing rules or special measures for transfer of hard-to-value intangibles”. This discussion draft sets out an approach to hard-to-value intangibles and proposes revisions to the guidance in Section D.3 of the 2014 BEPS Report “Guidance on Transfer Pricing Aspects of Intangibles”. The revised guidance explains the difficulties faced by tax administrations in verifying the arm’s length basis on which pricing was determined by taxpayers for transactions involving a specific category of intangibles. The Discussion Draft also proposes an approach based on the determination of the arm’s length pricing arrangements, including any contingent pricing arrangements, that would have been made between independent enterprises at the time of the transaction. This approach is applied when specific conditions are met and it is intended to protect tax administrations against the negative effects of information asymmetry.


Comments on BEPS Action 12: Mandatory Disclosure Rules

BEPS Monitoring Group (May 2015).


Comments on BEPS Action 3: Strengthening the Rules on CFCs

BEPS Monitoring Group (May 2015).


Public Comments Received on BEPS Action 12: Mandatory Disclosure Rules

OECD (May 2015).


Public Comments Received on BEPS Action 3: Strengthening CFC Rules Part 1

OECD (May 2015).


Public Comments Received on BEPS Action 3: Strengthening CFC Rules Part 2

OECD (May 2015).


Public Discussion Draft BEPS Action 11: Improving the Analysis of BEPS

OECD (April 2015). Public comments are invited on an OECD discussion draft which deals with Action 11 (Improving Analysis of BEPS) of the BEPS Action Plan.


Dozens of Companies Admit Using Tax Havens

Citizens for Tax Justice (March 2015). It’s been well documented that major U.S. multinational corporations are stockpiling profits offshore to avoid U.S. taxes. Congressional hearings over the past few years have raised awareness of tax avoidance strategies of major technology corporations such as Apple and Microsoft, but, as this report shows, a diverse array of companies are using offshore tax havens, including the pharmaceutical giant Amgen, the apparel manufacturer Nike, the supermarket chain Safeway, the financial firm American Express, banking giants Bank of America and Wells Fargo, and even more obscure companies such as Advanced Micro Devices and Group 1 Automotive.
All told, American Fortune 500 corporations are avoiding up to $600 billion in U.S. federal income taxes by holding more than $2.1 trillion of “permanently reinvested” profits offshore. In their latest annual financial reports, twenty-eight of these corporations reveal that they have paid an income tax rate of 10 percent or less in countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.


Public Discussion Draft BEPS Action 3: Strengthening CFC Rules

OECD (April 2015). Public comments are invited on an OECD discussion draft which deals with action 3 (Strengthening CFC Rules) of the BEPS Action Plan.


Australia’s Tobin Tax arguments and evidence

Cameron Amos, The Australia Institute (March 2015). A tax on financial transactions, known as a “Tobin” tax, could protect superannuation investors, improve the operation of Australia’s capital markets and provide a source of tax revenue of over $1 billion per year, according to a policy brief from The Australia Institute.


Tax avoidance: the role of large accountancy firms (follow up)

UK Parliament, House of Commons, Committee of Public Accounts (January 2015). The tax arrangements PwC promoted in Luxembourg bear all the characteristics of a mass-marketed tax avoidance scheme according to the Public Accounts Committee report published Friday 6 February 2015.


OECD BEPS public comments – Action 10 low value adding intra-group services


OECD BEPS public comments - Action 14 make dispute resolution mechanisms more effective


OECD BEPS public comments - Action 6: prevent treaty abuse


OECD BEPS public comments - Action 7: prevent artificial avoidance of pe status


G20 International Tax Symposium Report

G20 (May 2014). The G20 International Tax Symposium was held in Tokyo on 9 to 10 May 2014 and brought together representatives from government, business, international organisations, civil society and academia to discuss the G20 tax agenda. Over 230 delegates from nearly 40 countries attended.
The purpose of the Symposium was to ensure a broad range of stakeholders, including low-income and developing countries, had an opportunity to contribute to the G20 tax agenda. It was an opportunity for countries from the Asia-Pacific region and those not represented at the OECD and G20 to discuss global solutions and the impact of reforms.
This report summarises the Symposium discussions and highlights recurring themes, including widespread support for the G20 tax agenda and the need for consultation and cooperation to achieve reform.


G20 Policy Note – Strengthening Tax Systems

G20 (September 2014).  Well-functioning domestic and international tax systems are essential to domestic economies, global trade and maintaining community and business trust in governments.

Where the tax burden isn’t spread fairly or there are loopholes in tax laws that allow some companies to escape paying their share of tax, taxpayers and businesses either have to pay more tax or accept a reduced level of government services.

In recent years international tax laws have failed to keep pace with changes in the global business environment, particularly with the rapid growth of the global economy, meaning that multinational corporations aren’t necessarily taxed the way they should be.

The G20 is strongly committed to international cooperation to protect the integrity of national tax systems. International tax cooperation will continue to focus on three related areas.

  1. Address tax avoidance, particularly, base erosion and profit shifting (BEPS) to ensure profits are taxed in the location where the economic activity takes place.
  2. Promote international tax transparency and the global sharing of information so that taxpayers with offshore investments comply with their domestic tax obligations.
  3. Ensure that developing countries benefit from the G20’s tax agenda, particularly in relation to information sharing.

In February, G20 Finance Ministers and Central Bank Governors endorsed a new standard on automatic exchange of tax information between tax authorities in order to increase transparency in tax systems and act as a deterrent to tax evasion by private citizens.

In September, G20 Finance Ministers and Central Bank Governors committed to the completion of the measures under the two-year G20-OECD Base Erosion and Profit Shifting (BEPS) Action Plan by 2015. Ministers and Governors also agreed to begin exchanging information automatically between G20 countries and with other countries by 2017 or the end of 2018.


OECD Discussion Draft on BEPS Action 6 – Preventing Treaty Abuse

OECD (November 2014). Public comments are invited on a discussion draft which deals with follow-up work mandated by the Report on Action 6 (“Prevent the granting of treaty benefits in inappropriate circumstances”) of the BEPS Action Plan.


Global Integrity Summit – Tax Integrity

Griffith University (November 2014). The globalisation of finance is generally seen as having many benefits. But financial globalisation also provides greater opportunities for base erosion and profit shifting (BEPS), hollowing out the collection of tax for public purposes by rich and poor nations alike. Such matters raise questions of tax justice and the ethics of corporations and the professionals who advise them.
Tax integrity has a number of dimensions. Firstly, the purpose of taxation is to fund activities which the sovereign authority considers in the public interest. BEPS may be seen as compromising tax integrity by undermining the capacity of the taxation system to fulfil this core function.
Secondly, there is an overlapping set of principles for equitable and efficient tax systems. While there is much debate in detail, statements of those principles frequently emphasise that taxes should be broadly based, neutral,
predictable, easy to comply with, cheap to collect and enforce, equitable (those in similar circumstances should be more or less equally taxed), and progressive to at least some degree (or at least non-regressive). A taxation system in which the principles underlining it are clearly stated and consistently followed can be said to have integrity. If the system fails to live up to those principles (whether by failures of administration or widespread tax avoidance/ minimisation) it can be seen to lack integrity.


Addressing the Tax Challenges of the Digital Economy – Action 1

OECD (September 2014). The spread of the digital economy poses challenges for international taxation. This report sets out an analysis of these tax challenges. It notes that because the digital economy is increasingly becoming the economy itself, it would not be feasible to ring-fence the digital economy from the rest of the economy for tax purposes. The report notes, however, that certain business models and key features of the digital economy may exacerbate BEPS risks. These BEPS risks will be addressed by the work on the other Actions in the BEPS Action Plan, which will take the relevant features of the digital economy into account. The report also analyses a number of broader tax challenges raised by the digital economy, and discusses potential options to address them, noting the need for further work during 2015 to evaluate these broader challenges and potential options.


Neutralising the Effects of Hybrid Mismatch Arrangements – Action 2

OECD (September 2014). This report sets out recommendations for domestic rules to neutralise the effect of hybrid mismatch arrangements and includes changes to the OECD Model Tax Convention to address such arrangements. Once translated into domestic law, the recommendations in Part 1 of the report will neutralise the effect of cross-border hybrid mismatch arrangements that produce multiple deductions for a single expense or a deduction in one jurisdiction with no corresponding taxation in the other jurisdiction. Part 1 of the report will be supplemented by a commentary, which will explain the recommended rules and illustrate their application with practical examples. Part 2 of the report sets out proposed changes to the Model Convention that will ensure the benefits of tax treaties are only granted to hybrid entities (including dual resident entities) in appropriate cases. Part 2 also considers the interaction between the OECD Model Convention and the domestic law recommendations in Part 1.


Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance – Action 5

OECD (September 2014). Preferential regimes continue to be a key pressure area in international taxation. The OECD’s 2013 BEPS report recognises that these need to be dealt with more effectively and the work of the Forum on Harmful Tax Practices (FHTP) needs to be refocused with an emphasis on substance and transparency. This is an interim report that sets out the progress made to date.


Preventing the Granting of Treaty Benefits in Inappropriate Circumstances – Action 6

OECD (September 2014). This report includes proposed changes to the OECD Model Tax Convention to prevent treaty abuse. Countries participating in the BEPS Project have agreed on a minimum standard to prevent treaty shopping and other strategies aimed at obtaining inappropriately the benefit of certain provisions of tax treaties. The report also ensures that tax treaties do not inadvertently prevent the application of legitimate domestic anti-abuse rules. The report clarifies that tax treaties are not intended to be used to generate double non-taxation and identifies the tax policy considerations that countries should consider before deciding to enter into a tax treaty with another country. The model provisions included in the report provide intermediary guidance as additional work is needed, in particular in relation to the limitation on benefits rule.


Guidance of Transfer Pricing Aspects of Intangibles – Article 8

OECD (September 2014). This document contains revisions to the OECD Transfer Pricing Guidelines to align transfer pricing outcomes with value creation in the area of intangibles. The changes clarify the definition of intangibles and provide guidance for related parties; including transactions involving intangibles and the transfer pricing treatment of local market features and corporate synergies. Some transfer pricing issues relating to intangibles are closely related to other issues that are to be addressed during 2015, most notably in relation to the allocation of risk among MNE group members and recharacterisation of transactions. Because of those interactions some sections of this document are in intermediate form and will be finalised in 2015.


Guidance on Transfer Pricing Documentation and Country-by-Country Reporting – Action 13

OECD (September 2014). This document contains revised standards for transfer pricing documentation and a template for country-by-country reporting of revenues, profits, taxes paid and certain measures of economic activity. These new reporting provisions, and the transparency they will encourage, will contribute to the objective of understanding, controlling, and tackling BEPS behaviours. Countries participating in the BEPS project will carefully review the implementation of these new standards and will reassess no later than the end of 2020 whether modifications should be made to require reporting of additional or different data. Effective implementation of the new reporting standards and reporting rules will be essential. Additional work will be undertaken to identify the most appropriate means of filing the required information with and disseminating it to tax administrations.


Developing a Multilateral Instrument to Modify Bilateral Tax Treaties – Action 15

OECD (September 2014).  This report identifies the issues arising from the development of a multilateral instrument that modifies bilateral tax treaties. Without a mechanism for swift implementation, changes to model tax conventions only widen the gap between the content of these models and the content of actual tax treaties. Developing such a mechanism is necessary not only to tackle base erosion and profit shifting, but also to ensure the sustainability of the consensual framework to eliminate double taxation. This is an innovative approach with no exact precedent in the tax world, but precedents for modifying bilateral treaties with a multilateral instrument exist in various other areas of public international law. Drawing on the knowledge of experts in public international law and taxation, the Report concludes that a multilateral instrument is desirable and feasible, and that negotiations for such an instrument should be convened quickly.


Part 1 of a Report to G20 Development Working Group on the Impact of BEPS in Low Income Countries

OECD (July 2014).


Standard for Automatic Exchange of Financial Account Information in Tax Matter

OECD (July 2014). The Standard for Automatic Exchange of Financial Account Information, developed by the OECD with G20 countries, represents the international consensus on automatic exchange of financial account information for tax purposes, on a reciprocal basis. Over 60 jurisdictions have committed to implementing the Standard and all financial centres have been called to match those commitments, as of July 2014.

This publication is the first edition of the full version of the Standard for Automatic Exchange of Financial Account Information. It contains the text of the Model Competent Authority Agreement and the Common Reporting Standard, and the Commentaries thereon, as they read on 15 July 2014. It also includes multilateral and nonreciprocal versions of the Model Competent Authority Agreement, the technical modalities and a wider approach to the Common Reporting Standard.

A copy of the publication can be accessed at: http://www.oecd-ilibrary.org/fr/taxation/standard-for-automatic-exchange-of-financial-account-information-for-tax-matters_9789264216525-en.

 


Advancing Global Action to Support Fiscal Sustainability

Angel Gurria, Secretary General, OECD (June 2014). In the international tax sphere, the Organisation for Economic Co-operation and Development (OECD) is working in two key areas. First, it has a project on base erosion and profit shifting (BEPS) that is modernising the rules for the taxation of multinational corporations. Second, it is seeking to end offshore tax evasion via the automatic exchange of  nformation (AEoI) on tax matters.


OECD Live Webcast Update on BEPS powerpoint presentation

OECD (May 2014). Senior members from the OECD’s Centre for Tax Policy and Administration (CTPA) gave the latest update on the BEPS Project and its’ September 2014 deliverables, including:

  • Transfer Pricing Documentation and Template for Country-by-Country Reporting
  • Tax Treaty Abuse
  • The Tax Challenges of the Digital Economy
  • Hybrid Mismatch Arrangements

OECD Discussion Draft on Transfer Pricing Documentation and CbC Reporting – Public Comments Received Volume 1 – Letters A to C

OECD (March 2014).


OECD Discussion Draft on Transfer Pricing Documentation and CbC Reporting – Public Comments Received Volume 2 – Letters D to J

OECD (March 2014).


OECD Discussion Draft on Transfer Pricing Documentation and CbC Reporting – Public Comments Received Volume 3 – Letters K to R

OECD (March 2014).


OECD Discussion Draft on Transfer Pricing Documentation and CbC Reporting – Public Comments Received Volume 4 – Letters S to Z

OECD (March 2014).


Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard

OECD (February 2014). Responding to a mandate from G20 leaders to reinforce action against tax avoidance and evasion and inject greater trust and fairness into the international tax system, the OECD has unveiled today a new single global standard for the automatic exchange of information between tax authorities worldwide. Developed by the OECD together with G20 countries, the standard calls on jurisdictions to obtain information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.


PUBLIC CONSULATION: Discussion Draft on Transfer Pricing Documentation and CbC Reporting

OECD (January 2014). In the 19 July 2013 BEPS Action Plan, the OECD was directed to “[d]evelop rules regarding transfer pricing documentation to enhance transparency for tax administration, taking into account the compliance costs for business. The rules to be developed will include a requirement that MNE’s provide all relevant governments with needed information on their global allocation of the income, economic activity and taxes paid among countries according to a common template”.
This paper contains an initial draft of revised guidance on transfer pricing documentation and country-by-country reporting. It is submitted for comment by interested parties. This document does not necessarily reflect consensus views of either the Committee on Fiscal Affairs (CFA) or of Working Party n°6 (WP6) regarding the issues it addresses. Rather, it reflects limited consideration of the issues in the short time since the publication of the Action Plan and seeks to identify issues for public comment. It is considered that stakeholder comments are essential to advancing this work. Specific issues on which comments would be appreciated are noted in the draft.


Compilation Of Comments Received In Response To Request For Input On Tax Challenges Of The Digital Economy

OECD (January 2014). On 22 November 2013, a request for input on the tax challenges of the digital economy was published on the OECD website, with a deadline of 22 December 2013. The OECD now publishes the comments received.

The OECD is grateful to the commentators for their input which will be discussed by delegates to the Task Force on the Digital Economy at its February 2014 meeting.

The following stakeholders have submitted their input:

    Association for Financial Markets in Europe (AFME) & British Bankers’ Association (BBA)
    Bates White Economic
    BEPS Monitoring Group (BMG)
    Chartered Institute of Taxation (CIOT)
    Consultative Committee of Accountancy Bodies (CCAB) – Ireland
    Deloitte LLP
    Digital Economy Group: Baker & McKenzie LLP
    European Banking Federation (EBF)
    Greenwich for FFtélécoms
    GSM Association (GSMA)
    Informa Group plc
    International Bar Association (IBA)
    International Bureau of Fiscal Documentation (IBFD)
    Japanese commentator (anonymous)
    Solocal Group
    Swiss Banking
    WTS Tax Legal Consulting


Comments On Senate Finance Committee Discussion Draft On International Business Tax Reform

Citizens for Tax Justice (January 2014). The Senate Finance Committee’s discussion draft on international tax reform fails to accomplish what should be three goals for tax reform.
1. Raise revenue from the corporate income tax and the personal income tax.
2. Make the tax code more progressive.
3. Tax American corporations’ domestic and offshore profits at the same time and at
the same rate.
The discussion draft would, in a proclaimed revenue-neutral manner, impose U.S. corporate taxes on offshore corporate profits in the year that they are earned. But it would do so at a lower rate than applies to domestic corporate profits. The goal of revenue-neutrality causes the discussion draft to fail the first goal of raising revenue as well as the second, because any increase in corporate income tax revenue would make our tax system more progressive, as explained below. The discussion draft also fails to meet the third goal. Although it would tax domestic corporate profits and offshore corporate profits at the same time, it would subject the offshore profits to a lower rate, preserving some of the incentive for corporations to shift investment (and jobs) offshore or to engage in accounting gimmicks to make their U.S. profits appear to be generated in offshore tax havens.


Action Plan on Base Erosion and Profit Shifting
OECD (July 2013)


G20 Leader’s Declaration
Russia G20 (September 2013).  Read the G20 Leader’s Declaration for the latest statement on international tax and transparency.


No More Shifty Business: A response to the OECD’s Base Erosion and Profit Shifting report on tax published in February 2013
Jointly produced by a large number of civil society organisations (March 2013).


OECD Secretary-General Report to the G20 Finance Ministers and Central Bank Governors
OECD (July 2013)


Automatic Exchange of Information: The Next Step – Information Brief
OECD (June 2013)


A Step Change In Tax Transparency, Delivering a standardised, secure and cost effective model of bilateral automatic exchange for the multilateral context
OECD Report for the G8 Summit (June 2013)

A new OECD report, A Step Change in Tax Transparency, prepared at the request of the G8 for the Lough Erne Summit, outlines four concrete steps needed to put in place a global, secure and cost effective model of automatic exchange of information. The report follows the G20 Finance Minister's endorsement in April 2013 of automatic exchange of information for tax purposes as the expected new standard. It says because tax evasion is a global issue, the model needs to have worldwide reach to avoid merely relocating the problem elsewhere. The process also needs to be standardised to minimise costs for businesses and governments and to improve effectiveness.


Apple Is Not Alone
Citizens for Tax Justice (June 2013)

Recent Congressional hearings on the international tax-avoidance strategies pursued by the Apple corporation documented the company's strategy of shifting U.S. profits to offshore tax havens. But Apple is hardly the only major corporation that appears to be engaging in offshore-tax sheltering: seventeen other Fortune 500 corporations disclose information, in their financial reports, that strongly suggests they have paid little or no tax on their offshore holdings.


Submission to Issues Paper on Implications of the Modern Global Economy for the Taxation of Multinational Enterprises
Tax Justice Network Australia (May 2013)

The TJN-Aus agrees with the OECD that tax dodging by multinational companies can "produce unintended and distortive effects on cross-border trade and investments" and that "it distorts competition and investment within each country by disadvantaging domestic players".


Secrecy Jurisdictions, the ASX100 and Public Transparency
Dr Mark Zirnsak, Justice & International Mission Unit, United Church in Australia (May 2013)

Tax, not aid, is the most sustainable source of finance for development. Tax can help make governments accountable to their citizens, while aid can make them accountable to the interests of foreign donors. As put by South Africa's Finance Minister, Trevor Manuel, "It is a contradiction to support increased development assistance yet turn a blind eye to actions by multinationals and others that undermine the tax base of a developing country".


Apple Holds Billions of Dollars in Foreign Tax Havens: virtually none of its $102 billion offshore stash has been taxes by any government
Citizens for Tax Justice (May 2013)


Forum on Tax Administration Final Communique
OECD (16-17 May 2013, Moscow)

Tax Commissioners from 45 countries gathered in Moscow commit to co-ordinated action to tackle transnational fraud, evasion and aggressive tax planning. In their final communique, they warned evaders that ‘however hard they try to hide, they will be found’.


Revised Section E on Safe Harbours in Chapter IV of the Transfer Pricing Guidelines
OECD (May 2013)


Africa Progress Report 2013
Africa Progress Panel (May 2013)

Africa is standing on the edge of enormous opportunity, this year’s Africa Progress Report finds, and African policy makers have critical choices to make. They can either invest their natural resource revenue in people to generate jobs and opportunities for millions in present and future generations. Or they can squander this opportunity, allowing jobless growth and inequality to take root. In many African countries, natural resource revenues are widening the gap between rich and poor. Although much has been achieved, a decade of highly impressive growth has not brought comparable improvements in health, education and nutrition. The Africa Progress Panel is convinced that Africa can better manage its vast natural resource wealth to improve the lives of the region’s people by setting out bold national agendas for strengthening transparency and accountability. However, international tax avoidance and evasion, corruption, and weak governance represent major challenges. The report therefore welcomes the commitment from the current G8 presidency, the United Kingdom, and other governments to put tax and transparency at the heart of this year’s dialogue. It urges all OECD countries to recognize the cost of inaction in this vital area. Africa loses twice as much in illicit financial outflows as it receives in international aid. The Africa Progress Panel finds it unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximize their profits, while millions of Africans go without adequate nutrition, health and education.


OECD Secretary-General Report to the G20 Finance Ministers
OECD (April 2012)

OECD Secretary-General Angel Gurria has presented a report to G20 Finance Ministers and Central Bank Governors that highlights measures to ensure that all taxpayers pay their fair share. The report covers three strategic initiatives: 1) Progress reported by the Global Forum on Transparency and Exchange of Information for Tax Purposes including the upcoming ratings of jurisdictions' compliance with the Global Forum's standards on exchange of information on request; 2) Efforts by OECD to strengthen automatic exchange of information; 3) Latest developments to address tax base erosion and profit shifting, a practice that can give multinational corporations an unfair tax advantage over domestic companies and citizens.


Implications of the Modern Global Economy for the Taxation of Multinational Enterprises Issues Paper
Australian Government Treasury (May 2013)

There is growing concern ‘€œ in Australia and globally ‘€œ that many of the key rules of international taxation may not have kept pace with the evolution of the global economy. International tax reform is increasingly on the agenda of G20 Finance Ministers and Leaders. Last year the Government asked the Treasury to develop a Scoping Paper to examine the risks to the sustainability of Australia's corporate tax base from the way current international tax rules are able to be used to minimise or escape taxation. This analysis is being informed by a specialist reference group, made up of business representatives, tax professionals, academics and the community sector. The purpose of this Issues Paper is to seek views of stakeholders and the community more broadly to ensure the analysis in the Scoping paper captures and addresses the key issues. The Issues Paper outlines the challenges that changes in the global economy pose to the international tax system.


Global Forum on Transparency and Exchange of Information for Tax Purposes Progress Report to the G20 Finance Ministers and Central Bank Governors: Global Forum Update on Effectiveness and Ongoing Monitoring
OECD (April 2013)

The report covers three strategic initiatives: 1. Progress reported by the Global Forum on Transparency and Exchange of Information for Tax Purposes including the upcoming ratings of jurisdictions' compliance with the Global Forum's standards on exchange of information on request; 2. Efforts by OECD to strengthen automatic exchange of information; 3. Latest developments to address tax base erosion and profit shifting, a practice that can give multinational corporations an unfair tax advantage over domestic companies and citizens.


No More Shifty Business: A response to the OECD's Base Erosion and Profit Shifting report on tax published in February 2013
Jointly produced by a large number of civil society organisations (March 2013)


Submission on Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013 Modernisation of transfer pricing rules
Tax Justice Network Australia (December 2012)


Tax Activists and the Global Movement for Development through Transparency
Allison Christians (2012)

Activists around the world seek to expose a global system that fails to tax multinationals adequately and thus deprives governments of needed revenues, with profound effects for development in the world’s poorest nations. These tax activists have sparked a global movement, with groups all over the world seeking progress for development in poor countries by demanding greater transparency about how and how much multinational companies pay taxes.


Towards Unitary Taxation of Transnational Corporations
Sol Picciotto, Tax Justice Network (9 December 2012)

It has become clear that we need to take a fresh look at how transnational corporations (TNCs) are taxed. This paper, building on long experience and analysis of the actual practice of tax administrations around the world, proposes a thorough reform of the system towards a fresh approach: Unitary Taxation. This would help place the international tax system on a foundation fit for the 21st century.


Addressing Base Erosion and Profit Shifting
OECD (February 2013)

The project, quickly known as BEPS (Base Erosion and Profit Shifting) is looking at whether, and if so why, the current rules allow for the allocation of taxable profits to locations different from those where the actual business activity takes place. The aim is to provide comprehensive, balanced and effective strategies for countries concerned with base erosion and profit shifting.


The Economist: Special Report on Tax Havens
Professor Jason Sharman and Matthew Vallencia (February 2013)

The Economist published a special report on Storm Survivors Offshore financial centres have taken a battering recently, but they have shown remarkable resilience.


IMF Working Paper – Taxing Financial Transactions: An Assessment of Administrative Feasibility
John D. Brondolo – IMF (1 August 2011)

The IMF’s fiscal affairs department has posted a working paper titled “Taxing Financial Transactions: An Assessment of Administrative Feasibility”, which examines the practical issues countries should deal with in the introduction and application of a financial transactions tax (FTT).


Systemically important financial institutions, derivatives and financial stability
Adrian Blundell-Wignall and Paul Atkinson, OECD (30 June 2011)

In this paper, Adrian Blundell-Wignall, the OECD chief financial expert sees value in establishing a financial transaction tax on derivatives OTC trading.


Multilateral Convention on Mutual Administrative Assistance in Tax Matters
OECD (1 Jun 2011)

New amendments to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters open the Convention to all countries, allowing them to benefit from cross border tax co-operation and information sharing.


Tax treaty issues related to the trading of emissions permits (discussion draft)
OECD (31 May 2011)

The OECD Committee on Fiscal Affairs (CFA) has released a preliminary analysis of the tax treaty issues related to the trading of emissions permits for public comment. This analysis addresses the application of the provisions of the OECD Model Tax Convention to the cross-border trading of emissions permits.


Consultation Paper: Reform of the Controlled Foreign Company Rules
Australian Commonwealth Treasury (Jan 2010)

Consultation paper prepared by Treasury regarding the reform and modernisation of the controlled foreign company (CFC) rules.