A combination of increased media attention on tax avoidance and the need to shore up Governmental tax receipts in difficult economic conditions has led to the tax arrangements of multi-nationals being put in the spotlight. The press and the activities of NGOs and charities have, in particular, raised the issue of tax avoidance in the public consciousness and the political arena.
Much of the debate, often addressing very complex issues, has been conducted in an unfortunately simplistic manner, eliding the difference between avoidance and evasion and painting legitimate, long-standing arrangements as aggressive avoidance, for example. However, in the furore over tax avoidance, one area in relation to which all could find common ground was the need to modernise the international tax rules.
Many of the rules which determine the tax treatment of cross-border situations pre-date the current digital economy. For example, it is now possible for businesses to sell goods and services into economies with no physical presence in a way that could not be conceived when the rules dealing with permanent establishments were first formulated. As a result, it can be difficult to apply these rules to the modern business context.
As a result of the growing pressure in the tax avoidance debate and at the request of the Governments of the G20, the OECD produced a report into base erosion and profit shifting (BEPS) in February 2013. This report received strong support from the G20 leaders and accordingly was followed in July 2013 by the OECD Action Plan, which set out 15 specific actions to be taken forward by the OECD.
In September 2015, the OECD published its final reports on these action points. They cover a wide-range of international tax issues, including: taxation of the digital economy; use of hybrid instruments and entities; modernising transfer pricing rules, especially with regard to intangibles; double tax treaty abuse; permanent establishment rules; CFC rules; base erosion via interest deduction; and country-by-country reporting.
Following the publication of the final reports, the focus now moves to the issue of implementation of the various agreed actions in the participating jurisdictions.
ATAD II: hybrid mismatches with third countries
AG opines on scope of anti-Directive shopping rules
Treaty relief and non-CIV funds discussion draft
OECD updates BEPS report on interest deductions
The Multilateral Convention to implement BEPS Tax Treaty Measures
UK consultation on interest restrictions: Simmons & Simmons response
BEPS and interest restrictions: banks and insurance companies
Draft Anti Tax Avoidance Directive approved
Further consultation on UK interest restrictions
OECD BEPS consultation on treaty entitlement of funds
EU Commission publishes anti-tax avoidance package
MPs to investigate UK tax system following Google tax deal
CbC Competent Authority Agreement signed
The OECD’s BEPS Action Plan
Encyclopaedia of BEPS: the effects on the funds market
UK consults on BEPS recommendations for interest restrictions
UK consults on CbC reporting
OECD releases final BEPS reports
BEPS Action 13: Country-by-Country Reporting Implementation Package
Preventing the artificial avoidance of PE status
OECD's discussion document on CFC rules
BEPS: What does it mean for funds and asset managers?
OECD progress towards implementing BEPS
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