OECD BEPS rules to curb multinational profit shifting ready in November
The OECD plans to have international agreement on new tax rules developed as part of its project to tackle aggressive tax avoidance by multinationals through the Base Erosion and Profiting Shifting (BEPS) project by the next G20 summit in November, with implementation completed before 2020 ‘at the latest’
Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, said the BEPS package will be presented to the G20 summit to be held in Turkey on 15 November.
In an interview with the BBC he said the new rules would mean technology companies such as Apple and Google would pay more tax in the UK, since they would not be able to make use of offshore options in the same way as before, and would be required to publish country-by-country details of their taxation arrangements.
The BEPs project has already published draft outlines of some of its action plans and is scheduled to provide details on the rest by September 2015.
The consultation period for a number of key discussion draft has just finished, including action 3 (interest deductions and other financial payments), action 12 (mandatory disclosure) and action 4 (controlled foreign companies regime).
Speaking about technology multinationals, Saint-Amans said: ‘Most of these companies have been extremely aggressive, pushing the boundaries of what is legal.
‘They have tried schemes that cannot resist further examination by tax administrations.
‘My advice would be instead of focusing on tax planning, please do the wonderful job you are doing on innovation and be much more conservative on tax planning
Saint-Amans said that over the last 20 years, jurisdictions had ‘ moved from a world where we were so good at eliminating double taxation with tax treaties and transfer pricing rules that we have facilitated double non-taxation’.
‘You have rules, they are bilateral, but businesses are global. And of course they can play on the differences between the sovereignties, or the gaps. And where are the gaps? In tax havens,’ he said.
Saint-Amans said that the BEPS project was evidence of a willingness to fix the rules and develop better co-operation. He said that new UK rules for a Diverted Profits Tax would need to be ‘co-ordinated’ with the OECD agreements.
The UK has already taken a unilateral approach to curbing excessive tax avoidance by introducing the Diverted Profits Tax (DPT) which came into effect in April, while Australia has also decided to introduce a similar tax measure to curb profit shifting by digital multinational companies.
