OECD Releases Responses On Measuring BEPS Impact
On October 7, 2014, the Organisation for Economic Cooperation and Development (OECD) published comments received from various stakeholders regarding the OECD’s work on establishing methodologies to collect and analyze data on base erosion and profit shifting (BEPS) and the actions to address it (Action 11).
In the main, many commentators recommended against collecting any additional or new data from taxpayers at this stage for monitoring the effectiveness of BEPS counter measures.
Will Moris, Chair of the Business and Industry Advisory Committee to the OECD’s Tax Committee, said: “We strongly advise against adding to the substantial burden faced by multinationals (MNEs), especially before the usefulness of all this new data has been established. We believe that existing data and new data provided by other BEPS Actions should be sufficient to allow for extensive analysis.”
“However, if new data is determined to be necessary, we would encourage the OECD to provide an analysis as to why existing data cannot satisfy the need in order to avoid duplicative requirements and additional costs,” Moris said.
Similar was the view of the Federation of German Industries (BDI), which pointed out that “the amount of data already being collected by the tax authorities is large and there is surely potential to use the existing data in a more structured and efficient way.”
The United States Council for International Business (USCIB) said that the OECD must ensure that the tests to establish the success of BEPS measures should remain consistent with the aims of the BEPS project, both, to support Governments to collect revenues and improve tax rules for multinationals to reduce the incidence of double taxation. “Policies that increase taxes paid by multinational enterprises at the expense of double taxation or reduced standards of living may be viewed as effective in reducing BEPS if a blinkered approach is adopted,” William J Sample, Chair of USCIB’s Taxation Committee, said.
In a separate response, the International Alliance for Principled Taxation (IAPT) said that there were many conceptual problems with the approach proposed, and highlighted circumstances that will make it “difficult to identify a meaningful set of corporate behaviors unaffected by BEPS behaviors or counter-measures.”
Respondents welcomed the OECD’s acknowledgement, in its request for input, that there is a need to maintain confidentiality for taxpayers and minimize administrative and compliance costs for taxpayers and tax agencies.
BEPS Action 11 responds to calls from the Group of Twenty (G-20) nations for an improvement to the availability and analysis of data on BEPS. It was said that “it is important to identify the types of data that taxpayers should provide to tax administrators, as well as the methodologies that can be used to analyze these data and to assess the likely economic implications of BEPS behaviors and actions taken to address BEPS.”
The request for input on Action 11 was released on August 4, 2014, and public comments were accepted until September 19, 2014.
