04/12/2017 – As part of continuing efforts to improve tax transparency and the international tax framework, the OECD has released the first analysis of individual countries’ progress in spontaneously exchanging information on tax rulings in accordance with Action 5 of the BEPS package of measures released in October 2015.

The first annual report on the exchange of information on rulings evaluates how 44 countries, including all OECD members and all G20 countries, are implementing one of the four new minimum standards agreed in the OECD/G20 BEPS Project.

A key aim of the project was to increase transparency, which resulted in a new minimum standard to ensure that information on certain tax rulings is exchanged between relevant tax administrations in a timely manner (Action 5). This minimum standard requires tax administrations to spontaneously exchange information on rulings that have been granted to a foreign related party of their resident taxpayer or a permanent establishment which, in the absence of exchange, could give rise to BEPS concerns. As a minimum standard, all members of the Inclusive Framework on BEPS have committed to implement this standard, and to have their compliance with the standard reviewed and monitored by their peers.

The standard covers rulings such as advance pricing agreements (APAs), permanent establishment rulings, related party conduit rulings, and rulings on preferential regimes. More than 10,000 relevant rulings were identified up to the end of 2016.

The annual report includes almost  on issues such as improving the timeliness of the exchange of information, ensuring that all relevant information on the taxpayer’s related parties is captured for exchange purposes, and ensuring that exchanges of information are made with respect to preferential tax regimes that apply to income from intellectual property.

The next annual peer review will cover all members of the Inclusive Framework, except for the developing countries that requested a deferral of their review to 2019.

More information on the BEPS Action 5 peer review and monitoring process (Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance).

[OECD website: Peer Reviews Released; LTN 233, 5/12/17; Tax Month Dec 2017]

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