Strategizing Multinational Tax Risks

http://www.oecd.org/site/ctpfta/

The Forum on Tax Administration (FTA) was created in July 2002 by the OECD with the aim of promoting dialogue between tax administrations and of identifying good tax administration practices.  The OECD link provides reference to the opening FTA remarks by Deputy Secretary-General Mr. Yves Leterme, and the Final Communique from the 16-17 May 2013 meeting in Moscow, Russian Federation.

The press release sets the stage with the following remarks:

• Tax base of governments is being threatened by international tax avoidance and evasion.
• Part of the answer to international avoidance by businesses is a question of tax policy, rather than administration.
• The development of a new set of international standards is going to require ever closer cooperation at the international level.
• International cooperation between tax administrations is enhanced by improved transparency, which helps tax administrations apply the rules effectively.
• Transparency is also key to the fight against international evasion.
• The OECD, working with the G20, is developing a new multilateral standard on automatic exchange of information.

The Final Communique’s first paragraph states the need to effectively address tax evasion, aggressive tax avoidance, trans-national tax fraud and aggressive tax planning.  The Communique addresses the need for increased transparency and comprehensive exchange of information, and strongly endorses exchanging information automatically.

Most importantly, the Communique further states: “We have developed a framework of co-operative compliance for the large business segment that provides a sustainable basis for a relationship based on transparency, justified trust and confidence between tax administrations and business.  We will continue to refine this framework, also working with the business community, and recommend all countries to adopt it.”

In today’s tax environment, against the backdrop of terminology including tax evasion, aggressive tax avoidance, tax fraud and aggressive tax planning, the recent and upcoming meetings of the OECD and related organizations are increasingly important.  The trend of a formal cooperative compliance framework is becoming more evident, and multinationals should already be planning for ways to develop such relationships with tax authorities around the world in present and future audits.

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