Implementation and deployment of BEPS
There was no surprise that the key issues that prompted the hottest debates were those coming out of the implementation of the BEPS OECD program by the respective Fiscal Authorities.
Dr Achim Pross, Head of International Co-operations and Tax Administration Division of OECD gave the keynote address, this message being that BEPS is delivering! Achim highlighted that BEPS actions were now widely deployed across the globe with 116 jurisdictions currently participating in the inclusive framework with 78 having signed the BEPS Multilateral Convention (which broadly implements updates to tax treaties simultaneously to reflect the constituent parts of the BEPS program that is reflected in tax treaties).
International Compliance Assurance Programme
ICAP (International Compliance Assurance Programme) has now been launched offering the joy of multilateral transfer pricing and PE assessments across up to eight jurisdictions at a time. The aims are bold, and the results of course are yet to be seen, but if it delivers tax certainly with fewer disputes to go through a MAP (mutual agreement procedure) and can be managed efficiently by taxpayers and FISC’s alike then there will be something to celebrate.
It was clear to me that despite claims of success, the MAP process is often taking too long to achieve a result with binding arbitration still not available in a significant proportion of MAP cases. A framework to ensure that MNEs (multinational enterprises) pay the right amount of tax is widely supported, but double taxation resulting from the authorities being unable to agree the fair split of taxable profits is not.
The policy makers represented by Germany and Norway assured the audience that they were ready to deal with the data overload from CBCR (Country-by-Country reporting) and that the taxpayer data would remain outside the public domain. Matters are not so clear here in the UK, with parliamentary pressure for public reporting very evident. This created some hot debate with very firm legal views from some countries that require the data to remain private. The overall feeling was that putting data into the public domain would not be understood by the general public and that corporates and authorities’ time would be subsumed into dealing with “tabloid” headlines to no-ones benefit.
EU State Aid
The debate on EU State Aid revealed the most significant difference of opinion with the basics of the cases proposed by the European Commission met by fierce resistance at every turn by the taxpayer. With the timelines between cases being identified as potentially involving state aid to final resolution looking like 10 years or more, and with further cases to be announced, this looks likely to remain a feature of the European tax landscape and key battleground between large corporates – mostly but not solely involving US MNE’s to maintain some semblance of non-bias this looks to be an
area where MNE’s will deploy legal advisors and tax experts to fight their claims. It is likely to be some time before any pattern emerges and I suspect that each case will be very fact specific meaning a read across will not evolve to the other cases. Of course, a taxpayer success will encourage other defendants to battle on and no doubt the same in reverse.
Results from the Chair’s polling
Having secured my own ‘hat-trick’ of chairing the International Tax Congress for the last three years I thought I should share the results of the Chair’s polling as it provided very clear feedback on the world of taxation today.
The highlights from this year’s poll (or possibly lowlights depending on your point of view);
1. 100% of delegates agreed that now is the time of the greatest change in taxation in their working lives
2. 100% do not believe that these changes have simplified tax rules
3. 25% believe that the introduction of ‘General Anti Avoidance Rules’ in their home country represents effective legislation
4. 100% believe that more rather than less disputes will arise in the future
5. an overwhelming belief amongst delegates that more State Aid cases will emerge
6. the vast majority believe the U.S. has a different tax agenda to the rest of the world and;
7. surprisingly 40% believe that a digital turnover tax is now the way to go…
If you have any questions about any of the topics covered, please get in touch with Marvin Rust or one of the A&M Taxand team.