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Sept. 9 — The world's advanced economies want to create a “global forum” aimed at ensuring that outcomes from the international plan to fight base erosion and profit shifting are implemented by a wide range of countries, not just wealthy and emerging economies, the OECD's tax chief, Pascal Saint-Amans, told Bloomberg BNA.
“The final BEPS package is going to be great, but now we need to make sure that the adopted rules are really implemented,” he said Sept. 9.
Since 2013, the Organization for Economic Cooperation and Development has been working on a 15-item BEPS action plan under Group of 20 authority with the aim of closing “loopholes” that allow multinationals to drastically reduce their taxes. Along the way, the project has faced criticism that it neglected developing countries.
In a final communique following their Sept. 4-5 summit in Ankara, Turkey, G-20 finance ministers and central bankers said they expect to adopt a final BEPS package at their next meeting in Lima, Peru, in October, to submit to G-20 leaders for adoption at their Nov. 15-16 summit in Antalya, Turkey.
The effectiveness of the BEPS project in creating a globally fair and modern international tax system “will be determined by its widespread and consistent implementation,” the finance ministers said. Saint-Amans said that means that it will be crucial to get non-OECD and non-G-20 economies that may have harmful tax practices to commit to the new rules.
The BEPS program work initially included only the OECD's 34 member countries and G-20 countries, eight of which are emerging economies but aren't OECD members. Responding to criticism, the OECD in the past year has worked to include more countries that aren't members of either group in BEPS consultations and meetings of the Committee on Fiscal Affairs, although they have had only observer status.
The G-20 communique calls on the OECD to prepare a framework by early 2016 that would involve interested countries outside the G-20, particularly developing economies, in BEPS work.
Saint-Amans said the G-20 wants the OECD to create a new body for implementing BEPS that would be similar to the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, whose 127 member jurisdictions include many that are neither OECD nor G-20 members.
“The OECD has been mandated to build up something like a new Global Forum on Transparency, where all the countries would be on an equal footing for their needs and views to be fully respected and incorporated on the way forward to implementing BEPS,” Saint-Amans said.
He said the organization will present a plan for such a body at the G-20 finance ministers' February 2016 meeting.
To make sure that developing countries can effectively benefit from the plan, it may be necessary to create other measures or rules to help them adapt, the OECD official said.
In a 160-page report to the Ankara G-20 finance meeting, OECD Secretary-General Angel Gurria said the organization has already increased developing country participation in the BEPS program. Fourteen developing countries participate in the project's decision-making and technical working parties, with that participation including the upcoming CFA meeting Sept. 21-22, when the committee will approve final reports under the BEPS plan, he said.
In October, a second round of regional network meetings for 2015 will begin, with representatives from more than 80 countries gathering at five locations worldwide to discuss BEPS implementation measures.
The meeting will also provide input on preliminary work under the G-20 Development Working Group's mandate for practical support on BEPS-related issues, Gurria said.
The G-20 noted that the OECD, the International Monetary Fund, the World Bank Group and the United Nations have been working on “toolkits” to help countries with resource problems they face related to tax policy, including BEPS.
Gurria said the organizations are working to help countries access comparable data for transfer pricing assessments, to be delivered in October 2016. Work on toolkits for determining appropriate transfer prices for minerals, dealing with transfer pricing documentation and addressing various kinds of base eroding payments also is underway, he said.
Gurria said the existing Global Forum on Transparency is working on a plan for monitoring jurisdictions' implementation of new G-20 rules on transparency of beneficial ownership and other arrangements, and on a system for ensuring that a planned automatic exchange of tax information protects confidentiality.
The OECD secretary-general also presented final proposals for tougher incentives to ensure that recalcitrant jurisdictions fully implement the international standard for tax information exchange on request.
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The G-20 ministers' final communique is at https://g20.org/wp-content/uploads/2015/09/September-FMCBG-Communique.pdf.
The “OECD Secretary-General Report to G20 Finance Ministers” is at http://www.oecd.org/g20/topics/taxation/oecd-secretary-general-tax-report-to-g20-FMCBG-september-2015.pdf.
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