Lack of U.S. Tax Reform Is `A Shame,' Says Saint-Amans

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By Rick Mitchell

Aug. 31 — The U.S. is seeing EU countries make a grab for tax revenue from U.S. companies because it has failed to implement key tax policy reforms, the head of OECD tax policy said.

Although the U.S. has been pretty active implementing key measures from the international project against tax base erosion and profit shifting, it hasn't acted to fix its tax system, which has a “too high” corporate tax rate and too many loopholes in the tax base, Pascal Saint-Amans, director of the Organization for Economic Cooperation and Development's Center for Tax Policy and Administration told Bloomberg BNA Aug. 31.

“Its a shame that the U.S. doesn't fix its system. They are saying all the tax that Europeans are trying to put their hands on is ours, but they are not taxing it. That is detrimental to U.S. growth, that is detrimental to U.S. jobs, which is detrimental to U.S. businesses. That's the big issue,” Saint-Amans said.

The OECD official commented ahead of the Group of 20 Countries leaders' summit Sept. 4-5 in Hangzhou, China. He said that there the organization will update leaders on its most recent work on tax policy, including work on tax transparency, base erosion and profit shifting and ways to improve tax certainty for companies.

Tax Certainty a `Priority.'

Saint-Amans declined to comment about the previous day's news that the European Commission plans to hit Apple Inc. with a $14.5 billion tax bill related to alleged illegal state aid from Ireland, saying that he is waiting to read the full decision first (169 TMIN, 8/31/16).

But he did note that “tax certainty is very important to multinational companies, and in the context of state aid cases its clearly on the top of the agenda.” Many companies have complained that measures in the 15-item battle plan for fighting BEPS that the OECD developed on G-20 authority will introduce more uncertainty.

“It's true that the world is getting more uncertain. There are more countries acting,” he said. So “providing some advice, principles or common rules to reduce uncertainty is a priority and we hope to come up with some practical proposals like better dispute resolution mechanisms, and others, for the German G-20 presidency” in 2017, he said.

An OECD/G-20 tax seminar in July already produced some fresh proposals on the subject, he said. At that seminar, discussions focused on the use of tax policy to not on drive innovation and support growth but also to enhance tax certainty to promote investment (143 TMIN, 7/26/16).

APAs Still Viable

The European Commission's decision on Apple Inc., which alleges that the company's APAs with Ireland violated EU rules, seems to call into question the viability of APAs to increase tax certainty, at least in the EU.

Without addressing the commissions ruling, Saint-Amans said, “APAs are definitely still viable, as long there as there is transparency among countries.” He noted that the BEPS Action 5 calls for automatic exchange of tax rulings. “As long as you inform your partners, you're fine. So they are definitely pretty certain for companies,” he said.

Coordinating on Transparency Blacklist

Regarding transparency, Saint-Amans said OECD meets about once a month with the European Commission to coordinate their work on criteria for listing countries that are deemed to be uncooperative from a tax transparency perspective.

During the summer, the OECD said, its criteria will consider:

  •  the country or jurisdiction's rating for implementing the OECD standard on exchange of tax information on request, as assessed by the Global Forum on Transparency and Exchange of Information for Tax Purposes;
  •  its commitment to automatic exchange of tax information starting in 2017 and 2018, which is “crucial for full transparency” and
  •  the country's implementation of legal instruments needed to carry out information exchange, particularly the multilateral convention on mutual assistance, now signed by more than 100 countries.

Saint-Amans has said countries that haven't signed the convention but have a treaty network fully compliant and able to cover automatic information exchange will be considered compliant.

OECD says a country failing to meet two of the three criteria can be considered uncooperative. But countries or jurisdictions rated “noncompliant” by the Global Forum, or those that can't be rated because they don't have the necessary legal framework in place, can on that basis alone be considered uncooperative.

Avoiding `Double Standards.'

The European Commission is reportedly insisting on tougher criteria to determine which territories end up on its tax haven blacklist, with a first list to be released by the end of 2016 (144 TMIN, 7/27/16).

Saint-Amans noted that the commission's approach differs in timing, with the OECD not planning to release its first list until the end of 2017. The commission also plans to consider jurisdictions' harmful tax practices and issues related to money laundering, which the OECD criteria don't address.

Because OECD has some members that have only partially implemented the forum's standard for information exchange on request, the organization has had to take a more lenient stance on criteria.

The commission, which doesn't have that situation for EU members, is free to take a freer or laxer approach to applying the Global Forum's transparency criteria, as long as it doesn't try to create new criteria. “That would create a double standard,” he said.

“But we are working with the commission to avoid double standards. And I am confident that the European Union will follow the Global Forum benchmark,” he said.

To contact the reporter on this story: Rick Mitchell in Paris at

To contact the editor on this story: Rita McWilliams at

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