Strategizing Multinational Tax Risks

With China’s commitment on 27 August 2013, all G20 countries have signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention), resulting in automatic exchange of information as the new global standard.

Tax authorities are cooperating multilaterally and automatically, as the Convention provides for spontaneous exchange of information, simultaneous tax examinations and tax assistance.  The accompanying press release, including a list of the 56 signatories, is available at:

http://www.oecd.org/tax/china-joins-international-efforts-to-end-tax-evasion.htm

What are the implications on Best Practices for these continuing developments?  Ideas for consideration include the following:

• Providing taxpayer information to one authority should be viewed as being provided to many countries worldwide, thus maintaining consistency is essential.  A formal methodology will ensure Best Practices are being followed.
• Tax assistance, simultaneous examinations and joint audits should be envisioned for reviewing the global Tax Risk Framework.
• Best Practices for implementation of Mutual Agreement Procedure (MAP) are a topic of frequent discussion by tax authorities worldwide; thus Best Practices for Multinationals should also be focused on risk identification, measurement and application of MAP.
• Related posts for reference:

1. 23 July, OECD exchange of information: Multilateral Convention review
2. 27 June, OECD FTA MAP forum to develop Best Practices
3. 25 June, OECD report to the G20: Status, training, effectiveness
4. 20 June, OECD Global Forum on Transparency and Exchange of Information: Activities
5. 18 June, OECD: Tax Transparency report.

Related articles

• China signing Multilateral Tax Convention (wantchinatimes.com)
• China joins G20-led global crackdown on tax evasion (rediff.com)
• China signs up to G20 crackdown on tax evasion (telegraph.co.uk)