Tax issues formed part of the discussion at the G20 Finance Ministers meeting in Shanghai on 26-27 February. As indicated in the final Communique, Paragraph 7 makes several points in support of broad, consistent and effective implementation of the BEPS project, including:
- Commitment to a consistent global approach, and encouragement to non-G20 countries, especially developing countries, to join in the OECD designed framework (see below).
- Awareness of the specific challenges faced by developing countries in BEPS implementation and support for building capacity for such countries.
The anti-MNC context for these G20 discussions is rooted in OECD estimates of of $100-240 billion in BEPS-related revenue losses. And the 2015 Addis meeting on financing for development has not resulted in material steps to help developing countries improve their capacity, thus raising a concern is that BEPS rules will be misused and/or selectively applied to MNCs.
Other tax-related items in the Communique include:
- Commitment to the standards for information exchange on request, and Automatic Exchange of Information (AEOI), with a request for all financial centers and jurisdictions to do so by 2018 at the latest;
- A request for all countries to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters;
- Endorsement of the proposal to develop a tax platform jointly by the IMF, OECD, UN, and World Bank Group, with a request for recommendations on how countries can contribute funding for tax projects and direct technical assistance by July 2016;
- Recognition of the role of tax policy in achieving sustainable economic growth.
While much of the above is not new, sponsors should note the increased interest in bringing in non-G20 countries into the process, and a willingness to look at new ways to support capacity building in developing countries. ITIC will monitor the proposed “tax platform,” and inputs from sponsors are of course welcome at any time.
The only specific commitment in Paragraph 7 relates to China’s pledge to establish an international tax policy research center, which would also provide technical assistance to developing economies. By way of background, the new OECD framework allows all interested countries and jurisdictions to join in efforts to update international tax rules, participating as BEPS Associates in an extension of the OECD’s CFA.
In addition to the Communique, the OECD Secretary-General’s Report to the G20 Finance Ministers is available on the OECD’s website.