Tax Executives Institute (TEI) has provided comments to the issuance of BEPS Action 12 Discussion Draft.
A link to TEI’s comments is provided for reference:
Multiple levels of disclosure options are provided, leading to inconsistency and complexity
Information provided is yet another compliance burden for MNE’s, with little cost/benefit to tax authorities
Concern about release of information to the public, especially prior to the time that full appeals are exhausted
Tax disclosure should only be required upon filing a tax return with a tax benefit from a reportable transaction
Limited rules re: who should report
Primary purpose or de minims filter process is not recommended
Reporting should be limited to new or innovative aggressive tax planning structures
Countries with criminal liability provisions should exclude reported transactions with self-incrimination protection
Penalty protection for reported transactions
TEI’s comments are well written, concise, practical and relevant. Their comments should be carefully reviewed prior to implementation of additional disclosures re: BEPS Action 12 that may prove to have little benefit and significant complexity.
EY’s Global Tax Alert of 13 April 2015 sets forth the latest summary of OECD BEPS developments, including the recent discussion drafts under BEPS Actions 3 and 12.
Additionally, the Alert also notes the copycat tactics of Australia re: the UK Diverted Profits Tax (DPT) that went into effect 1 April 2015. More news on this development should be forthcoming in the 2015-16 Australian Budget expected mid-May.
The recent BEPS discussion drafts, Action 3 re: CFC rules and Action 12 re: Aggressive tax planning arrangements, are of paramount importance for all MNE’s and tax administrations.
Australia’s tactics re: a UK DPT mechanism also highlights the controversial manner in which each jurisdiction is fighting for its fisc to the detriment of other tax administrations. However, what is not transparent in the rules provided to date for the UK DPT is the intent to avoid double taxation. It is hopeful that Australia will provide a balanced approach to this newfound mechanism for gaining tax revenues in a scheme that asks for full payment by a MNE prior to relevant appeals being filed and discussed.
The referenced PwC summary highlights the latest OECD proposal re: disclosures of tax planning arrangements. The Action is generally based on efforts to curb aggressive tax planning transactions for which there are not consistent standards for reporting/sharing details for such transactions.
MNE’s and other interested parties should review this proposal to better understand transparency trends and initiatives, as well as implement relevant planning processes and governance.