The OECD has provided further observations on its country-by-country information template, based on the premise such information is a useful guide in the risk assessment of transfer pricing for relevant jurisdictions. KPMG has provided a summary of the latest notes by OECD on this topic:
As this important initiative develops into final form, additional questions that may be asked include:
- Will this information only be provided to tax authorities both currently and in the future, versus subject to public disclosure? Will the OECD and/or separate countries’ provide for such legal assurance?
- Should tax authorities be requested to share results of a risk assessment, based on this data, with the taxpayer prior to any assessments to ensure facts are aligned to promote efficiencies upon assessment, and potentially in domestic or treaty based appeals? A possible Best Practice for adoption?
- How will relevance of the global information impact discussions and determinations in the relevant jurisdiction upon audit?
- Is a post-adoption survey planned to compare expectations with actual results, providing flexibility for ongoing changes as a risk assessment tool?
- To the extent that a country has adopted, or will adopt, different rules for global reporting, will the rules prescribed by OECD override, or supplement, domestic law? What (legal) mechanisms will be put in place to align expectations for domestic and international rules?
- What alignment is planned for countries utilizing the UN Model Convention?
- Will this tool be used differently for co-operative compliance engagements and/or joint audits?
Many other questions should be carefully considered, looking at both immediate issues for implementation and long-term effects for taxpayers and tax administrations.