Brussels, 05/10/2015 (Agence Europe) - On Monday 5 October, the European Commissioner for Taxation, Pierre Moscovici, congratulated the OECD on the “remarkable work” it has accomplished in the framework of its action plan to tackle base erosion and profit shifting ('BEPS') involving 62 countries, the final version of which was published on the same day.
The NGOs, on the other hand, have been somewhat critical of the final version of this highly anticipated action plan. Aside from the criticisms regarding the 'country-by-country' reporting of tax data (see other article), the organisation Eurodad laments the fact that instead of abolishing preferential regimes related to intellectual property ('patent boxes'), the OECD has decided to “develop weak and unclear guidelines for their use”, thereby legitimising these incentives and adding further complexity to the international tax system. Furthermore, the “OECD has decided that all existing innovation boxes can continue unchanged until 2021”, Eurodad regrets. The OECD's approach (known as a 'nexus' approach) aims to ensure that the granting of the preferential scheme is indeed linked to substantial economic activity in the country in question.
The Financial Transparency Coalition (FTC) expresses disappointment that the developing countries were not involved in the process. Despite repeated requests, “it seems like the OECD would rather invite them into the process once the ink is dry”, the organisation states.
Tax Justice Network (TJN) highlighted the fact that the G20 mandate for the BEPS project specifies that the international tax rules must be reformed to ensure that multinationals are taxed where economic activity takes place and where value is created. “This implied a new approach, to treat the corporate group of the multinational as a single firm, and ensure that its tax base is attributed according to its real activities in each country. Yet the BEPS project has continued to emphasise the independent entity principle”, explains TJN, which argues that this principle allows businesses to trade with offshore subsidiaries where there is often no real economic activity and to transfer profits into systems with low or zero rates.
On behalf of ACCA Global, which represents the profession of accountancy experts, Chas Roy-Chowdhury expressed concern at action point 14 of the BEPS plan on the dispute resolution mechanisms. Roy-Chowdhury is concerned that the criteria set out are not clear and strong enough and the timescales for resolution should be very much shorter than businesses have experienced up to now. “Disputes need to be resolved within 12 months and there needs to be sanctions against states that do not achieve this, in the form of their being required to repay the disputed tax to the business, where this has already been received by the tax authorities or, where still being contested, they lose their right to continue the dispute”, he said.
The BEPS project will be presented to the finance ministers of the G20 in Lima on 8 October.
“Swift implementation by governments will ensure a more certain and more sustainable international tax environment for the benefit of all”, said Angel Gurria, secretary general of the OECD. (Original version in French by Elodie Lamer)