BEPS Analyses Possible Without New Disclosures: Stakeholders

The Organisation for Economic Co-operation and Development (OECD) has published stakeholders’ comments on its discussion draft on base erosion and profit shifting (BEPS) Action 11, on improving analysis of BEPS.

Through Action 11, the OECD hopes to develop recommendations to better chart the scale and economic impact of BEPS issues, analyze the success of policy responses, and monitor the impact of BEPS going forward.

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.

The International Alliance for Principled Taxation (IAPT) urged the OECD to “first analyze the usefulness of [the existing] data sources for purposes of Action 11 before recommending the introduction of any additional data requirements on taxpayers or the sharing of additional existing information among tax administrations.” The IAPT noted that “the BEPS Action Plan (and various discussion drafts) already impose significant new reporting obligations on taxpayers, including more extensive transfer pricing documentation, country-by-country reporting requirements, and mandatory disclosures of aggressive or abusive tax transactions, arrangements, or structures.”

For its part, the Confederation of British Industry said: “Following the conclusion of the BEPS project, business will already be required to produce a significant amount of extra information to tax authorities. These documents should provide tax authorities with significantly more information that they currently possess and therefore we would suggest that analysis is also carried out on the new information that tax authorities will have to monitor BEPS before any additional burden is created for business under this Action.”

In individual comments, Michael Durst said: “Tax administrations generally accumulate large numbers of taxpayer transfer pricing reports in the course of examinations and advance pricing agreement negotiations. Governments therefore should have in their possession the data needed to track the widths of arm’s-length ranges reported by taxpayers, and the extent to which these ranges narrow over time. The OECD should consider including an indicator of this kind in its recommendation of measurements to be used in evaluating the success of BEPS reforms.”

The proposals, and the comments received, will be the subject of a public consultation at the OECD Conference Center in Paris on May 18, 2015.