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G20/OECD
BEPS
OUTCOMES
1
Marlies de RuiterHead Tax Treaties, Transfer Pricing and Financial Transactions Division
Globalisation 2
Profit
Tax Base
Shifting
Base Erosion
International Tax Rules
1890192019501980201020131869
3
• Fair share in a time of economic crisis
• Level playing field between multinationals and domestic businesses
• Co-ordinated action by governments is key
Public debate
BEPS Action PlanJuly 2013 October 2015
5
CoherenceHybrid Mismatch Arrangements (2)
Harmful TaxPractices (5)
InterestDeductions (4)
CFC Rules (3)
SubstancePreventing Tax Treaty
Abuse (6)
Avoidance ofPE Status (7)
TP Aspects of Intangibles (8)
TP/Risk andCapital (9)
TP/High RiskTransactions (10)
TransparencyMethodologies and Data Analysis (11)
DisclosureRules (12)
TP Documentation (13)
DisputeResolution (14)
Digital Economy (1)
Multilateral Instrument (15)
Action Items 6
Minimum standards
Reinforced international standards on tax treaties and
transfer pricing
Common approaches and best practices for domestic law
measures
Analytical reports with
recommendations (digital economy and multilateral instrument)
Detailed report on measuring
BEPS
7
What’s in the BEPS
package?
International Consensus8
Inclusiveness
1. Direct participation
2. Regional networks
3. Capacity building
Three track approach
9
Practical support
Q
Key data on BEPS
Loss of 4-10%
(USD 100-240 bn)
4% – 8.5% lower
ETR than similar
domestic firms
Fiscal and economic effects
Better data is needed
• To assess the effects of BEPS on shifting real economic
activity
• To perform statistical analysis based on Country-by-
country reports
• To update periodic Corporate Tax Statistics%
Global annual CIT revenue
MNE effective tax rates
10
Concentration of investments
Net FDI to GDP ratios
have increased sharply
BEPS in a nutshell
Parent Co
Intermediate
Co 2
Intermediate
Co 1
Ultimate Residence
Country
(High Tax)
Low Tax Intermediate
Country
High Tax
Intermediate
Country
Market or
Production
Country
(High Tax)
Local
Activity
• Avoid Taxable
Presence or
• Minimise
Assets/Risks
Low or no
Withholding
tax
• Hybrid
Mismatch
• Preferential
Regime
• Maximise
Deductions
Maximise
Assets/Risks
• Ineffective/No CFC Rules
• Maximise Deductions
• Minimise Assets/Risks
HQ
Expected impact
on BEPS
• Hybrid
Mismatch
• Preferential
Regime
• Maximise
Deductions
BEPS in a nutshell
Parent Co
Intermediate
Co 2
Intermediate
Co 1
Ultimate Residence
Country
(High Tax)
Low Tax Intermediate
Country
High Tax
Intermediate
Country
Market or
Production
Country
(High Tax)
Local
Activity
• Avoid Taxable
Presence or
• Minimise
Assets/Risks
Low or no
Withholding
tax
Maximise
Assets/Risks
Address techniques used to avoid
the PE status, e.g. by replacing a
distributor with a commissionnaire
arrangement; by artificially
fragmenting business activities to
take advantage of exceptions that
were initially adopted to prevent
the taxation of mere preparatory or
auxiliary activities; and/or by
splitting-up construction contracts
Align substance with value
creation through revised/new
guidance for applying the ALP:
delineation of actual transaction,
risk allocation, intangibles
including HTVI, CCA,
commodity transactions and
services
Limit interest deductibility:
Common approach on net
interest deductions limited to
a percentage (between
10%-30%) of EBITDA plus
optional group wide ratio
Address treaty abuse through a
minimum standards on treaty
shopping (i.e. LOB and/or PPT)
and other anti-abuse clauses
Action 7
Action 8-10
Action 4
Nexus approach uses
expenditure on R&D as a
Proxy for Activity in IP
regimes.
Compulsory spontaneous
exchange of information on
rulings
Common approach to
introduce coordination tools.
Combination of primary and
defensive rules. Ordering
rule that avoids double
taxation while preventing
double non-taxationAction 8-10
Include income creating
BEPS concerns in the
definition of CFC income, e.g.
income from digital sales
• Ineffective/No CFC Rules
• Maximise Deductions
• Minimise Assets/Risks
Action 5
Action 2
Action 8-10
Action 4
Action 3
Action 6
Action 13
Expected impact
on BEPS
TRANSPARENCY
AND
CERTAINTY
13
Transparency
Country-by-Country
ReportingMandatory disclosure
Exchange
of
rulings
MAC
Membership
FHTP
14
10361176
1311
1599
1341
1624 1678
1910
2266
883
843
904 951
13481187 1146
1299
1571
750
1000
1250
1500
1750
2000
2250
2500
2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of cases
Year
MAP cases initiated / completed by year
Dispute Resolution15
Mandatory binding
MAP arbitration
Supplementary commitment
A large group of countries>90% of MAP
cases
Minimum Standard
Peer review+
+
Dispute Resolution16
Holistic Approach
Monitoring
Legal certainty and
dispute resolution
Transparency
New and
revised rules
17Q
WHAT’S
NEXT?
18
Implementation
TP GuidelinesImmediately
Domestic Law MeasuresDomestic legislative procedures
Tax Treaty MeasuresRenegotiations
Multilateral instrument
19
effectiveness of the adopted measures
proper implementation by tax administrations
the impact on Taxpayers’ Compliance
Monitoring 20
8 OUTPUTS
Translate BEPS outcomes to toolkits
and reports for developing countries
Combined effort of international organisations
and regional organisations
Policy considerations & practical solutions
To be delivered in 2015 – 2018
Toolkits & reports 21
Inclusiveness
G20 Leaders 16 November 2015
22Q
“We, therefore, strongly urge the timely implementation of the project and encourage all countries and jurisdictions, including developing ones, to participate. To monitor the implementation of the BEPS project globally, we call on the OECD to develop an inclusive framework by early 2016 with the involvement of interested non-G20 countries and jurisdictions which commit to implement the BEPS project, including developing economies, on an equal footing.”
Website: www.oecd.org/tax/beps.htm
Contact: [email protected]
Tax email alerts:
www.oecd.org/ctp/tax-news.htm
Via Twitter: Follow us via @OECDtax
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