Incoming Saint-Amans Sees OECD Moving 'Back to Basics' in Transfer Pricing Approach

PARIS — Pascal Saint-Amans, who takes office today as head of the Organization for Economic Cooperation and Development's Center for Tax Policy and Administration (CTPA), spoke with Bloomberg BNA correspondent Rick Mitchell about his outlook on the current global tax scene and his plans for the CTPA.

Saint-Amans has headed the secretariat of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes since 2009. He plans a move "back to basics" for OECD tax and transfer pricing policy, in part to ease the way for emerging economies to implement OECD standards in these areas.

Transfer pricing is one of Saint-Amans top three priorities. The other two are better engagement with non-OECD countries and raising the profile of tax policy analysis.

In the transfer pricing area, the OECD faces a double challenge: it needs to simplify rules that have grown too complicated and also eliminate double taxation. In seeking to simplify the rules, Amans said his fear is that “governments may feel frustrated and come up with simple and dangerous solutions" such as controlled foreign corporation regimes and unilateral mechanisms.

Saint-Amans replaces Jeffrey Owens, who is retiring after more than 20 years steering OECD's tax policy, in concert with OECD's powerful Committee on Fiscal Affairs. The CFA includes tax officials from the OECD's 34 member countries, which include the world's advanced countries, as well certain major emerging economies that are not OECD members.

Flexibility and the Arm's-Length Standard

Saint-Amans says it is possible for the OECD to maintain a single set of standards for international tax rules while encouraging nonmember emerging economies to join the organization. Achieving that balance means that the standards must be adaptable, he adds.

However, Saint-Amans says, adapting does not mean endorsing a fixed-margin method. The arm's-length principle has been around since Article 9 of the first model tax convention back in the late 1920s and has been in the tax codes of the United States and France ever since. "This shows that the principle is flexible enough to be adaptable and to go through time."

Information Exchange

Saint-Amans challenges the assertion by some groups, such as the Tax Justice Network, that the 800 some-odd tax information exchange deals announced by the Global Forum on Transparency mainly benefit wealthy countries rather than developing ones.

This criticism "is wrong. … The agreements do predominantly help OECD countries, but there is a growing number of developing countries joining the Global Forum precisely to sign agreements." In addition, "most of the recent agreements have been signed with Kenya, South Africa, Botswana, India, China, Brazil, the global community." Of the forum's 107 members, "seven or eight of the last 10 to join have been developing countries,"

New Direction?

Asked whether he planned to move the OECD in a different direction from Owens, Saint-Amans says his ambition is "to keep the great things that Jeffrey Owens has achieved" and also "adapt to changing times."
Owens "was a good visionary in that he saw the emerging economies as a key issue … we did build the Global Forum together."

Saint-Amans, who is French, joined OECD in September 2007 as head of CTPA's International Cooperation and Tax Competition division, and took over as the first head of the Global Forum secretariat in September 2009.

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