As I predicted in my earlier post the OECD work on Base Erosion and Profit shifting features prominently:-
Another major accomplishment includes the work undertaken on reforming tax regulation fighting tax evasion. The G20 Action Plan on Base Erosion and Profit Shifting developed with the support of the OECD can be by all means considered the most prominent step towards modernization and coordination of our countries' tax policies in a hundred years.
So what does this agreement contain in terms of measures. I wrote on the OECD Action plan in July and excerpts follow:-
‘The OECD have come out with a 44 page Action plan on tackling base erosion and profit shifting. The plan is squarely aimed at limiting the ability of multi nationals to reduce their corporation tax bills.
Angel Gurria was interviewed by Bloomberg TV at the G20 Finance Ministers meeting in Moscow this morning shortly after the launch of the plan.
He confirmed measures to address double non taxation of profits through an action plan containing 15 initiatives which will be worked on over the next two years:
Address the tax challenges of the digital economy
Neutralise the effects of hybrid mismatch arrangements
Strengthen CFC rules
Limit base erosion via interest deductions and other financial payments
Counter harmful tax practices more effectively, taking into account transparency and substance
Prevent Treaty Abuse
Prevent the artificial avoidance of PE status
Assure that transfer pricing outcomes are in line with value creation
Establish methodologies to collect and analyse data on BEPS and the actions to address it
Require taxpayers to disclose their aggressive tax planning arrangements
Re-examine transfer pricing documentation
Make dispute resolution mechanisms more effective
Develop a multi lateral instrument
The last item is likely to involve a move to automatic information exchange as a global standard.