OECD Tax Talk #12 – BEPS

Bucher Tax AG, Switzerland, Lucerne, Zug, international, BEPS, OECD, tax planning, tax consultancy, tax advisory, tax advisor, tax expert, companies, corporate tax, establishments, location consultancy, direct federal tax, taxes, AEOI, corporate successio

The 12th OECD Tax Talk took place on 11 June 2019. Attending were Pascal Saint-Amans, Director of Centre for Tax Policy and Administration, Achim Pross, Head of International Co-operation and Tax Administration, Sophie Chatel, Head of Tax Treaty Unit, Mayra Lucas, Senior Advisor Tax Treaties & Transfer Pricing Division, and David Bradbury Head of Tax Policy and Statistics Division.


At first, Pascal Saint-Amans referred to the meeting of the G20 finance ministers and central bank governors in Fukuoka (Japan) that took place on 8-9 June 2019. Four new documents were presented to the G20 finance ministers:

The G20 reiterated its political support for the BEPS project at this meeting. It used strong messages, particularly with regard to the current efforts regarding the tax challenges arising from digitalisation, as Pascal Saint-Amans noted with satisfaction:

«We welcome the recent progress on addressing the tax challenges arising from digitalisation and endorse the ambitious work program that consists of a two-pillar approach, developed by the Inclusive Framework on BEPS. We will double our efforts for a consensus-based solution with a final report by 2020.»

(G20 Communiqué)

The G20 also praises the progress regarding tax transparency and the automatic exchange of information. Information on over 47 million bank accounts has already been exchanged under the AEOI, 21'000 tax rulings under the spontaneous exchange of information and 80 countries have now enacted laws to exchange country-by-country reports (CbCRs).

Tax Challenges of the Digital Economy (Action Point 1)

The rest of the webinar focused on the detailed «programme of work», which describes how the OECD intends to proceed until the end of 2020 and find a uniform solution to meet the tax challenges of a digitalised economy.

As already explained in the last OECD Tax Talk, the consensus-based final solution will be based on the following two pillars:

Bucher Tax AG, taxes, Switzerland, Lucerne, Zug, international, tax consultant, tax expert, tax advisor, BEPS, OECD, AEOI, establishments, corporate taxes, companies, private individuals, corporate succession, direct federal tax, location consultancy,

According to the second pillar, a minimum tax shall be introduced for internationally active companies. The first pillar indicates where this minimum tax is to be paid, whereby three different methods of profit allocation are currently being evaluated («modified residual profit split», «fractional apportionment» and «distribution-based approaches») and a new nexus regulation is being devised.

The individual proposals which are currently under consideration will also be subjected to a comprehensive analysis. What are the possible impacts and the advantages and disadvantages of the proposed methods? An interim report on these analyses and evaluations is to be published by October or November 2019.

New BEPS website

At the end, the new BEPS website - sponsored by the Japanese G20 Presidency - was presented in a short video. The website contains a lot of information and explanatory videos about the BEPS project, as well as an interactive map where one can compare the different countries. It is definitely worth taking a look!

Conclusion

Pascal-Saint Amans concluded by stressing that the 129 participating states are all equal within the BEPS project. It is not a platform where only the big, powerful states make the decisions. And that is also how it should be in the search for a solution to the tax challenges of a digitalised economy. All countries are working together and are involved in order to find a common consensus and compromise. This is very ambitious, especially within the short timeframe until the end of 2020. But Pascal Saint-Amans is positive that they will make it thanks to the political support they receive from all sides. Pascal Saint-Amans and his team intend to return with a new webinar in September 2019.