Liechtenstein To Set Up BEPS Working Group
The Liechtenstein Government plans to set up a working group to closely monitor and recommend domestic tax policy responses to the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) project.
The Government anticipates that the OECD’s work will have a significant impact on the territory’s economy, which is going through something of a transformation after the adoption of tax information exchange agreements to create a transparent and conducive environment for businesses. It highlighted that the project has a particular focus on boosting the taxing rights of the country in which a business has a physical presence — it’s office space, property and employees — and the location from which value is created.
The Government said that it expects as a result of recommendations to be released in September 2014, and to be finalized by the end of 2015, that international tax transparency will be intensified; there will be an increased use of multilateral instruments; and there will be significant changes in the apportionment of taxing rights.
The OECD’s BEPS project has a particular focus on enhancing nations’ transfer pricing regimes by enhancing transfer pricing documentation and country-by-country reporting, tackling tax treaty abuse, addressing the tax challenges of the digital economy, and tackling hybrid mismatch arrangements.
The working group would be in charge of recommending amendments to the territory’s legislation to bring the territory’s regime into line with any new standards or rules that might emerge as a result of the project, to ensure legal certainty for businesses in tax matters.