The Toolkit on Tax Treaty Negotiation (the “Toolkit”), has been prepared in the framework of the Platform for Collaboration on Tax (the “PCT”) by the IMF, the OECD, the UN and the WBG (the “PCT Partners”).
Date and time:
Wednesday, November 4, 2020 9:00 am Eastern Standard Time (New York, GMT-05:00) Change time zone
2 hours 30 minutes
Please join The Platform for Collaboration on Tax (PCT) for the public consultation webinar of its draft Toolkit on Tax Treaty Negotiations. The toolkit authors and expert speakers will discuss how the toolkit can help developing countries, followed by a demo of the interactive, web-based version of the toolkit and a feedback roundtable with experienced negotiators.
PCT’s draft Toolkit on Tax Treaty Negotiations is a joint effort to provide capacity-building support to developing countries on tax treaty negotiations, building on existing guidance, particularly from the UN Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries (the “UN Manual”). The Toolkit provides tax officials with:
***Information on the steps involved in tax treaty negotiations ***Practical tips for treaty negotiators on the conduct of negotiations and negotiation styles ***Easy access to already publicly available resources that treaty negotiators will find useful
The design of the Toolkit also allows regular updates and improvements based on the feedback from users and experienced negotiators.
The PCT released the draft toolkit for public feedback from June 29th to September 24th, 2020 through its website and the KSP-TA hub. In addition to written comments, this virtual workshop aims to gather further feedback from stakeholders, particularly treaty negotiating teams.
The Toolkit represents a joint effort to provide capacity-building support to developing countries on tax treaty negotiation, building on previous contributions and reducing duplication and inconsistencies.
On October 19, 2017, Tax Executives Institute (TEI) filed a letter with the Platform for Collaboration on Tax, a joint initiative of the World Bank, OECD, International Monetary Fund, and United Nations, regarding the Platform’s draft toolkit on the taxation of offshore indirect transfers. TEI’s comments focused on the need for the Platform’s toolkit to educate and provide options to nations considering taxing offshore indirect transfers, rather than prescribing a preferred approach, among other things.
The Platform for Collaboration on Tax (the Platform), a joint initiative of the Organisation for Economic Co-Operation and Development, International Monetary Fund, United Nations, and World Bank, released a document entitled The Taxation of Offshore Indirect Transfers – A Toolkit (the Draft Toolkit or Toolkit) on 1 August 2017. The Draft Toolkit was designed to help developing countries address the complexities of taxing offshore indirect transfers of assets, which the Platform states is a practice by which some multinational corporations try to minimize their tax liability.
The toolkit and TEI’s submission paper are referenced herein for review
Highlights of TEI’s comments include the following points:
There should be symmetry and neutrality as compared to direct asset transfers
Status of toolkit is unclear, and is not a source of authoritative guidance
The goal of the draft toolkit is unclear
A capital gains tax can distort economic transactions
Gains and losses should be the subject of the toolkit
Most indirect transfers are made for economic, not tax, reasons
The general treaty definition of immovable property seems to have been abandoned with no reason
The toolkit can be applauded for launching a multi-organizational approach with some good ideas, although such ideas should be further challenged and developed prior to an overall vision and detailed rules promulgated
On 22 June 2017, the “Platform for Collaboration on Tax” (the Platform) – a joint effort of the Organisation for Economic Co-operation and Development (OECD), United Nations (UN), International Monetary Fund (IMF) and World Bank Group (WBG) – released a toolkit (the Toolkit) designed to help developing countries address the lack of “comparables” for transfer pricing analyses and better understand mineral product pricing practices.
This Toolkit should also be reviewed by multinationals (MNEs) in developing countries to address the potential lack of comparables to better understand how the tax authorities will approach a transfer pricing audit. The mining supplement is required reading for those working in that industry.
Additional toolkits will be forthcoming:
Indirect transfer of assets
Base eroding payments
Tax treaty negotiation capacity
Supply chain management
BEPS risk assessment
As the first edition of the Toolkit has now been published, it will be interesting to watch developing countries apply the tools prescribed, providing a baseline going forward. All international tax practitioners should be familiar with this latest joint endeavor, as it is an indication of the shared resource approach that is now our future.
EY’s Global Tax Alert provides additional details, and the OECD Toolkit are referenced for review.
World Bank Group President Jim Yong Kim’s statement: “If everyone pays their fair share – developing countries can close their financing gaps and promote inclusive growth.”
The IMF and World Bank will continue to collaborate with the OECD and other development partners in expanding tax assistance and expertise.
Two pillars of development:
International tax dialogue to increase their collective voice
Developing diagnostic tools to evaluate and strengthen tax policies
These developments will be a key metric to monitor, in view of the increased complexity and documentation demands in a post-BEPS era.
Multinationals may also view these developments as added impetus to be more proactive in engaging with tax authorities in developing countries to better understand their business, as well as provide expertise in the complex transfer pricing arena.
The Asia-Pacific Regional Network on BEPS discussed the impact of BEPS on their region in its meeting on 12-13 February 2015, with over 50 senior tax officials from 21 jurisdictions and international organisations attending. Attendees included the Asian Development Bank, IMF, US Agency for International Development (USAID) and the Study Group on Asian Tax Administration and Research (SGATAR).
Twelve direct participants in the BEPS project consist of Australia, Japan, Korea, New Zealand, China, India, Indonesia, Malaysia, Singapore, Bangladesh, Philippines and Vietnam. The discussion summary is included for reference:
Participants supported the cooperative and inclusive process for developing countries to support the OECD/G20 strategy.
All stakeholders, including MNE’s, should be engaged to address BEPS solutions.
Recognition of uncoordinated regional efforts addressing interest deductibility (Action 4), PE (Action 7), transfer pricing issues (Actions 8-10), and transfer pricing documentation (Action 13).
The introduction of toolkits, further support, and assistance is welcomed, including their participation in the OECD dialogue process.
Further guidelines on dispute resolution were requested by business and NGO representatives.
Future involvement will focus on additional engagement, participation and collaboration with various partners.
Next meeting is scheduled for 16-18 March 2015.
As the BEPS project proceeds to finalize its deliverables this year, the input of this organization and other interested parties will provide a limited window of opportunity to share views and practical suggestions to ensure consistency for taxpayers and tax administrations regionally and globally. Accordingly, monitoring (including active participation in) future developments will be critical to form Best Practices for taxpayers and tax administrations.
Most importantly, it will be critical to ensure regional participants do not execute unitary legislation prior to release of the final OECD guidelines to ensure the BEPS process is successful. The timing of such initiatives should also be a priority for the Asia-Pacific Network, its participants and other countries around the world.
OECD Tax Inspectors Without Borders (TIWB) and Toolkit: 30 January 2015
Creation of task force and prior meeting of SGATAR: 1 December 2014
OECD BEPS Strategy for Developing Countries: 13 November 2014
The Forum on Tax Administration (FTA), representing heads of tax administrations from 38 countries, concluded their 9th meeting on 24 October, 2014. The meeting represented attendance by over 130 delegations, including representatives from the African Tax Administration Forum (ATAF), Inter-American Center of Tax Administrations (CIAR), Centre de Rencontre des Administrations Fiscales (CREDAF), International Monetary Fund (IMF) and the Intra-European Organisation of Tax Administrations (IOTA). The meeting included strategic visions for the Mutual Agreement Procedure (MAP) and Co-operative Compliance programs.
Links to the meeting summary and MAP vision are included for reference:
The following actions were agreed:
Enhanced cooperation strategy, based on existing legal instruments.
Created a new international tax platform, Joint International Tax Shelter Information and Collaboration (JITSIC Network) to focus on tax avoidance.
Implement the new standard on automatic exchange of information while protecting taxpayer confidentiality.
Improve practical operation of Mutual Agreement Procedure (MAP) to address double tax issues more quickly and efficiently, integrated with the OECD BEPS action item. Competent authorities of all member countries are “encouraged” to actively participate in this initiative.
Promote a voluntary compliance structure.
Develop principles on Co-operative Compliance arrangements that form an integral part of effective tax control frameworks.
MAP Strategic Plan summary – “Statement of Vision and Commitment”
Collaboration of the FTA MAP Forum with other multilateral bodies, including OECD’s Working Party 1’s Focus Group, to further its goals.
Participating Competent Authorities (CAs) commit to the stated goals and be accountable thereto.
Allocation of adequate staffing levels and resources to meet CAs working demands.
Adequate training programs and personnel practices.
FTA MAP Forum’s engagement to address resource challenges.
Empowerment of CAs to effect agreements in accordance with principles in the respective tax conventions.
Absence of undue influence by administrative policies, practices or goals.
Support resolution of MAP cases in accordance with multilateral principles, avoiding efforts such as maximizing revenue collection.
Adoption of principle based and mutual trust principles.
Adopt Best Practices in the pursuit of new initiatives to streamline and enhance processes to expedite MAP resolution.
Sharing MAP Best Practices among FTA MAP participants.
New MAP processes to elevate difficult cases.
Enhance taxpayer’s involvement in case resolution, including bilateral/multilateral meetings and sharing case developments.
Seek ways to avoid MAP cases, including APAs, joint audits, “roll-forward” adjustments and other techniques.
Use multilateral MAP procedures.
Adopt agreements for issue consistency.
Avoidance of MAP manipulation by auditors.
Deliver training on double taxation and CA processes via a “Global Awareness Training Module.”
The above meeting commitments and objectives are welcome as tax controversies increase and MAP procedures have seeming lost the elements of timeliness, cost-effective resolution, avoidance of double taxation, transparency and efficiency.
It is hopeful that most tax administrations endorse, and commit to, the above MAP framework in an effort to achieve Best Practices for a win–win opportunity.
The International Monetary Fund (IMF) has published an interesting paper addressing the impacts that current, and proposed, international tax legislation has on others. Selected key issues include tax treaties, indirect transfers of interests, interest deductibility, arm’s length pricing, formulary apportionment, treaty shopping, and appendices of tables and statistics. The paper also highlights guiding principles for international tax design, timely concepts as the OECD is preparing to publish responses to several of its BEPS Action Plan items this coming week.
The paper can be referenced at:
The paper is valuable in addressing tax policy topics and issues, thereby setting the stage for future international tax debates.
The executive summary of a paper entitled “The Structures and Mandates of Eight International and Regional Organizations That Work on Tax” was published earlier this year by the International Tax and Investment Center (ITIC) with the Vienna University of Economics and Business. The link to the article is referenced herein:
The executive summary provides valuable insights into tax structures and mandates of various organizations, including the IMF, World Bank and the UN. The two primary sections are entitled “Who are the Main Players in the International Tax Arena” and “How can Business Interact with Different Groupings?”
The first section includes a description of the breadth of activities for the organizations, including those of the UN that include transfer pricing, exchange of information, cross border VAT issues, taxes in climate change, financial transaction taxes, tax on foreign direct investment, and natural resource taxation. The second section is very interesting reading, providing insights into how Multinationals (MNE’s) can proactively interact with the various tax policy making bodies.
The topics of tax policy, and interaction between the MNE’s and the relevant organizations, have evolved into very significant issues in today’s changing tax environment. Roles in a MNE, and the necessity to proactively interact with such organizations has now become a necessity that will derive mutual benefits and win-win relationships.