BEPS:Update on Progress and Next Steps

The BEPS Action Plan

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BEPS Action Plan published in July 201315 Actions organised around threemain pillars:• The coherence of corporate tax at the international

level• A realignment of taxation and substance• Transparency, coupled with certainty and

predictabilityIt also calls for targeted work in the area of the digitaleconomy, and for the development of a multilateralinstrument to implement the measures developedunder the action plan.

Endorsed by G20 Leaders (6 September 2013):…“We fully endorse the ambitious and comprehensive Action Plan[…] Profits should be taxed where economic activities deriving theprofits are performed and where value is created. (…)

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Coherence

Hybrid Mismatch Arrangements (2)

Harmful TaxPractices (5)

InterestDeductions (4)

CFC Rules (3)

Substance

Preventing Tax Treaty Abuse (6)

Avoidance ofPE Status (7)

TP Aspects of Intangibles (8)

TP/Risk andCapital (9)

TP/High RiskTransactions (10)

Transparency

Methodologies and Data Analysis (11)

DisclosureRules (12)

TP Documentation (13)

DisputeResolution (14)

Digital Economy (1)

Multilateral Instrument (15)

The BEPS Action Plan – 15 Actions

OECD/G20 BEPS Project

• The work is carried out by the Committee on Fiscal Affairs (CFA) via its subsidiary bodies

• All eight non‐OECD G20 countries (Argentina, Brazil, China, India, Indonesia, Russia, Saudi Arabia and South Africa) and OECD Accession countries (Colombia and Latvia) are Associates in the BEPS Project

• Associates in a Project participate on an equal footing with OECD countries, including participation in its bureau in the Committee overseeing the project in the discussions and in the decision‐making process 

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• More than 3,500 pages of comments from 462 stakeholders 

• 5 public consultations streamed live and attended by business representatives, NGOs and academics

• 4 webcasts which attracted over 20,000 viewers

An inclusive process – stakeholders

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Stakeholders’ input

Digital Economy (63)

Treaty Abuse (79)

TP Intangibles (67)

Hybrids (70)

TP Documentation 

(183)

Total comments received: 462

21

7

31

1

2

1

27

6

41

2

3

0

39

6

16

1

5

0

30

3

34

2

1

0

66

21

67

18

9

0

Law & Account Firms

MNE

Business and Lobby

NGO and civil society

Academia

Non Member

Source of comments:

Digital Economy (63)

Treaty Abuse (79)

TP Intangibles (67)

Hybrids (70)

TP Documentation (183)

Total number of pages: 3587

• Extensive engagement with developing countries and plans to strengthen and institutionalise participation in the process– Global Relations Programme– Tax and Development Programme– UN and BEPS Subcommittee – 4 regional consultations (South‐East Asia, Africa, Latin America), 4 Global Fora (Tax Treaties, Transfer Pricing and VAT), 2 Task Force on Tax & Development and last year’s Advisory Group’s meetings. 

– Input fed into technical work and informed two‐part report of the G20 Development Working Group highlighting priorities and need for specific work/toolkits

An inclusive process – developing countries

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An ambitious timeline – Deliverables

September 2014 September 2015 December 2015

Digital Economy Report Hybrids Review of HTP Regimes Preventing Treaty Abuse Addressing TP aspects of 

Intangibles (Phase 1) Addressing TP 

documentation Multilateral Instrument 

Report

CFC Rules Interest Deductibility Strategy on expansion of FHTP Addressing avoidance of PE 

status Addressing TP aspects of 

Intangibles (Phase 2) Addressing TP aspects of risks 

and capital Addressing TP aspects of other 

high risk transactions Report on Data and Economic 

Analyses Mandatory Disclosure Rules Dispute Resolution

Addressing TP Interest Deductions

Revision of HTP Criteria Multilateral Instrument

THE 2014 DELIVERABLES

• After 12 months of work, committee meetings, online collaboration, engagement with developing countries, discussion drafts, stakeholders input, and public consultations …

• … The seven 2014 deliverables have been agreed by consensus by OECD and G20 countries, together with a statement that explains their content and nature

• With this first set of deliverables, the OECD/G20 Project has gone a long way in achieving consensus on key measures to address BEPS.

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Where are we in the process?

• Explanatory Statement• 3 Reports:

‒ two final reports on the Digital Economy (Action 1) and the Feasibility of a Multilateral Instrument (Action 15)

‒ one interim report on progress in fighting Harmful Tax Practices (Action 5)

• Draft Rules in 4 areas– Hybrid mismatch arrangements– Treaty abuse– TP Intangibles– TP Documentation and CBC template 

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2014 Deliverables

THE 2015 DELIVERABLES

2015 Deliverables

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Action   Expected Output

3‐ Strengthen CFC Rules Recommendations regarding the design of domestic rules

4‐ Limit Base Erosion via Interest Deductions and Other Financial Payments – phase 1 and 2

Recommendations regarding the design of domestic rules and Changes to the Transfer Pricing Guidelines 

5‐ Counter Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance – phase 2 and 3

Strategy to expand participation to non‐OECD members and Revision of existing criteria to identify HTP

7‐ Prevent the Artificial Avoidance of PE Status  Changes to the Model Tax Convention

8‐ Assure that Transfer Pricing Outcomes are in Line With Value Creation / Intangibles – phase 2

Changes to the Transfer Pricing Guidelines and possibly to the Model Tax Convention

9‐ Assure that Transfer Pricing Outcomes are in Line With Value Creation / Risks and Capital

Changes to the Transfer Pricing Guidelines and possibly to the Model Tax Convention

10‐ Assure that Transfer Pricing Outcomes are in Line With Value Creation / Other High‐Risk Transactions

Changes to the Transfer Pricing Guidelines and possibly to the Model Tax Convention

11‐ Establish Methodologies to Collect and Analyse Data on BEPS and the Actions to Address It

Recommendations regarding data to be collected and methodologies to analyse them

12‐ Require Taxpayers to Disclose Their Aggressive Tax Planning Arrangements Recommendations regarding the design of domestic rules

14‐Make Dispute Resolution Mechanisms More Effective  Changes to the Model Tax Convention 

15 ‐ Develop a multilateral instrument – phase 2 Multilateral Instrument

NEXT STEPS

Next Steps – 2014 Deliverables

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• All recommendations are agreed but will remain in draft form sothat the potential impact of the 2015 deliverables can beincorporated before finalising them.

• Implementation is of pivotal importance and additional work needsto be carried out in a number of areas to ensure a consistent andcoordinated application of the agreed rules.

• Work on the implementation of the rules will be carried out andfinalised by 2015 in relation to:– Hybrid Mismatch Arrangements (Action 2)– Treaty abuse (Action 6)– Transfer pricing documentation and country‐by‐country

reporting (Action 13)

• The next outputs of the BEPS Project are due to be delivered in September and December 2015 

• Further guidance and detailed work will be developed with input from stakeholders

• Stakeholders will be involved until the end of the Project:– First discussion drafts out in Nov/Dec 2014– Public consultations in Jan/Feb/March 2015– Check the updated stakeholders’ calendar online http://www.oecd.org/ctp/discussiondrafts.htm

• Engagement with developing countries will be strengthened and developing countries needs will be addressed through broadening of the  work/toolkits

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Next Steps – 2015 Deliverables

Further information:http://www.oecd.org/ctp/beps.htm

Questions and further information

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