The OECD has released its first recommendations for a co-ordinated international approach to combat tax avoidance by multinational enterprises, under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project designed to create a single set of international tax rules to end the erosion of tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax.
Presenting the OECD’s recommendations, Secretary-General Angel Gurría said the G20 had “identified base erosion and profit shifting as a serious risk to tax revenues, sovereignty and fair tax systems worldwide”.
The first 7 elements of the BEPS Action Plan released focus on helping countries to:
- ensure the coherent corporate income taxation at the international level, through new model tax and treaty provisions to neutralise hybrid mismatch arrangements (Action 2);
- realign taxation and relevant substance to restore the intended benefits of international standards and to prevent the abuse of tax treaties (Action 6);
- assure that transfer pricing outcomes are in line with value creation, through actions to address transfer pricing issues in the key area of intangibles (Action 8);
- improve transparency for tax administrations and increase certainty and predictability for taxpayers through improved transfer pricing documentation and a template for country-by-country reporting (Action 13);
- address the challenges of the digital economy (Action 1);
- facilitate swift implementation of the BEPS actions through a report on the feasibility of developing a multilateral instrument to amend bilateral tax treaties (Action 15); and
- counter harmful tax practices (Action 5).
The OECD recommendations will be a key item on the agenda when G20 Finance Ministers convene at a meeting hosted by Australia on 20-21 September 2014 in Cairns.
[LTN 180, 17/9/14]