Transcript ETPF/IFS Conference International

THE IMPLEMENTATION OF
THE BEPS PACKAGE
IFA Asia-Pacific Regional Tax Conference
12-13 May 2016, Seoul, Republic of Korea
David Bradbury
Head of the Tax Policy and Statistics Division
OECD’s Centre for Tax Policy and Administration
Implementation of the BEPS package
Background
Measuring
and
Monitoring
BEPS
Inclusive
Framework
Next Steps
2
Background to the BEPS Project
Tax sovereignty, tax
treaties and globalisation
Need for global
action
Double non-taxation
& stateless income
Breakdown of
international
consensus
Digitalisation &
growth of
intangibles
Crisis, fiscal
consolidation &
parliamentary inquiries
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Global action required
September 2013: G20 Leaders endorsed ambitious and
comprehensive BEPS Action Plan with 15 Actions
October 2015: 13 reports delivered just 2 years later
New or reinforced international standards and
concrete measures to help countries tackle BEPS
Unparalleled effort - OECD/G20 countries working together
on an equal footing with many developing countries
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Objectives of the BEPS Project
Towards a greater alignment
Restore confidence in the system
Build a global consensus
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What did the final BEPS package include?
Detailed report on measuring and monitoring BEPS
4 minimum standards
Reinforced international standards on tax treaties
and transfer pricing
Common approaches and best practices for
domestic law measures
Analytical reports with recommendations
(digital economy and the multilateral instrument)
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15 Actions around 3 main pillars
Digital Economy (1)
Coherence
Hybrid Mismatch
Arrangements (2)
Substance
Transparency &
Certainty
Preventing Tax Treaty
Abuse (6)
Avoidance of
PE Status (7)
Measuring and
Monitoring BEPS (11)
CFC Rules (3)
Interest
Deductions (4)
Harmful Tax
Practices (5)
Transfer Pricing
Aspects of Intangibles
(8)
Disclosure Rules (12)
Transfer Pricing
Risk and Capital (9)
Transfer Pricing
Documentation (13)
Transfer Pricing
High Risk Transactions
(10)
Dispute
Resolution (14)
Multilateral Instrument (15)
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Implementation of the BEPS package
Background
Measuring
and
Monitoring
BEPS
Inclusive
Framework
Next Steps
8
What do we know about the scale
and impact of BEPS?
More than 100 empirical studies report evidence of BEPS
New OECD research finds that global net annual revenue loss of 4-10% of
CIT - USD 100-240 billion - at 2014 levels
• As a percentage of tax revenues, this is expected to be higher in developing
countries given their greater reliance on corporate tax revenues
BEPS creates many economic distortions
• Effective Tax Rates of large MNEs are lower than similar domestic firms
• Higher profit rate affiliates located in countries with lower statutory tax rates
• Favours intangible investments, companies locating debt in high-tax
countries and distorts the location of FDI
• Creates negative tax spillovers across countries
Anti-avoidance rules are effective in preventing BEPS in individual
countries, but coordinated measures could be more effective
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The global scale of BEPS
OECD BEPS revenue estimate compared to GDP in selected countries (2014)
300
250
USD billions
200
150
100
50
BEPS lower
bound
Morocco
Angola
Hungary
Kuwait
Bangladesh New Zealand Venezuela
Portugal
BEPS upper
bound
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Concentration of net FDI to GDP
Foreign direct investment is increasingly concentrated
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High profits of low-taxed affiliates
Higher-profit affiliates tend to have lower Effective Tax Rates
The highest percentage of income earned by low-taxed affiliates
with higher profit rates
12
ETRs - large MNEs v large non-MNEs
Effective Tax Rate Differentials
4 - 8½ pp
differential
MNEs
Large MNE entity
Large MNE entity
Non-MNE
similar
domestic
firm
Large non-MNE (domestic) entity
Large non-MNE (domestic) entity
13
Royalty receipts v R&D expenditure
Royalty receipts to R&D ratio is increasingly concentrated
14
Profit shifting through interest
Interest is concentrated in locations with above average statutory tax rates
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Incentives to engage in BEPS
While average statutory CIT rates have been declining in the OECD, tax
rate differentials between countries have been increasing
Corporate income tax rate variation within OECD countries
Corporate income tax rate on patent income variation within OECD countries
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15
10
10
5
5
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
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Implementation of the BEPS package
Background
Measuring
and
Monitoring
BEPS
Inclusive
Framework
Next Steps
17
Implementation3
Implementation, implementation, implementation…
“… We, therefore strongly urge the timely implementation of the
project and encourage all countries and jurisdictions, including
developing ones, to participate. To monitor the implementation of the
BEPS project globally, we call on the OECD to develop an inclusive
framework by early 2016 with the involvement of interested non-G20
countries and jurisdictions which commit to implement the BEPS
project, including developing economies, on an equal footing …”
G20 Leaders – Antalya November 2015
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Objectives of the framework
To ensure the effective and consistent implementation
of the BEPS package
• 4 minimum standards
• Essential to level the playing field
To enable all countries to participate in the standard
setting process for BEPS related issues
• Especially important for any future standard setting in
relation to new items or BEPS Actions where convergence
towards common approaches and best practices occurs
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Membership of the inclusive framework
Open to interested countries and jurisdictions
• Aside from BEPS Associates, the implementation process will also involve
‘jurisdictions of relevance’
Members must commit to the comprehensive BEPS Package and its
consistent implementation
Members will participate on an equal footing
• Will join the Committee on Fiscal Affairs as BEPS Associates
• Will fully participate in the consensus based decision making of CFA and
subsidiary bodies on BEPS issues and contribute to determining its
governance, structure and programme of work
Members will pay an annual BEPS Associates’ fee
• Reduced fee might be applied for some developing countries
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The framework’s programme of work
Reviewing the implementation of the four minimum standards
• Harmful tax practices (Action 5), treaty abuse (Action 6), country by
country reporting (Action 13) and improving mutual agreement
procedure (Action 14)
Standard setting for remaining BEPS issues
Ongoing monitoring and data gathering aspects of implementation
• Monitoring of the digital economy (Action 1) and measurement and
monitoring of BEPS and BEPS countermeasures (Action 11)
Implementation support, guidance and toolkits
• Feeds into the toolkit work and could potentially impact the
remaining BEPS standard setting work
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Toolkits for low-capacity developing
countries
To assist non-OECD/G20 countries implementing the BEPS measures and address
their specific concerns. G20 mandate asks for toolkits to be developed by the
OECD, in cooperation with the IMF, the WBG, the UN and regional organisations.
1. Report on Tax Incentives
November 2015
2. Toolkit on Transfer Pricing Comparability
October 2016
Incl. supplementary work on mineral pricing
3. Report on Indirect Transfers of Assets
June 2016
4. Toolkit on Transfer Pricing Documentation
October 2016
5. Toolkit on Tax Treaty Negotiations
December 2016
6. Toolkit on Base Eroding Payments
June 2017
7. Toolkit on Supply Chain Management
March 2018
8. Toolkit on BEPS risk assessment
March 2018
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International organisations
Platform for Collaboration on International Tax Matters
The Platform will produce the toolkits
IMF
• Most of the toolkits aim to translate BEPS
Actions into user friendly guidance for
low-capacity countries
• Some address international tax
issues not included in the BEPS
Project (i.e. indirect transfers)
UN
OECD
• Development of toolkits will be
informed by the Inclusive Framework
• The platform may identify international tax
issues and bring them to the attention of the
Inclusive Framework
WBG
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Implementation of the BEPS package
Background
Measuring
and
Monitoring
BEPS
Inclusive
Framework
Next Steps
24
Implementation of the BEPS package
Inaugural meeting of the Inclusive Framework
Kyoto, Japan: 30 June – 1 July 2016
At this meeting of senior level representatives of the
members of the Inclusive Framework will take key decisions
on governance, structure and the work programme of the
framework.
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Contact details
David Bradbury
Head of the Tax Policy and Statistics Division
Centre for Tax Policy and Administration
2, rue André Pascal - 75775 Paris Cedex 16
Tel: +33 1 45 24 15 97 – Fax: +33 1 44 30 63 51
[email protected] || www.oecd.org/tax
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