Exchange of Information and Tackling Base Erosion and Profit Shifting

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1 2015/SFOM13/018 Session: 4 Exchange of Information and Tackling Base Erosion and Profit Shifting Purpose: Information Submitted by: OECD 13 th Senior Finance Officials Meeting Bagac, Philippines June 2015

2 APEC SFOM SESSION 4: ADVANCING FISCAL TRANSPARENCY AND REFORMS EXCHANGE OF INFORMATION AND TACKLING BASE EROSION AND PROFIT SHIFTING RICHARD PARRY, OECD

3 Issues Challenge of dealing with international tax avoidance and evasion requires global cooperation Countering BEPS and exchanging information lie at heart of the new global tax order; also action against tax crimes Role of countries in the APEC region in taking forward the global agenda 2

4 Age of Transparency The end of bank secrecy: G20 in 2009 Restructure of Global Forum on Transparency and Exchange of Information for Tax Purposes 126 jurisdictions subject to peer review and ratings on implementation of standard of exchange of information on request (EOIR) Result = significant improvement in transparency and EOIR around the world, including Asia, over last five years Impacts: transparency relevant in combating tax evasion, corruption, anti-money laundering and illicit financial flows 3

5 Automatic Exchange of Information Benefits: A leap forward in addressing tax evasion Significant deterrent effect Reputation benefits: public confidence and integrity of the financial system Incremental change on top of FATCA: synergies and cost savings for financial institutions Opportunity for implementing domestic reporting 4

6 Co-operation Regional technical events (eg ADB in Manila in May 2015), in country co-operation. Encourage countries to join Global Forum, input into work and join instruments such as Multilateral Competent Authority Agreement Potential for peer learning: e.g. effective legislative frameworks, IT solutions, effective use of information received Ensuring developing countries can benefit: enormous potential for revenue gains; also important to make sure there are no places for tax evaders to hide OECD and Global Forum creating common solutions with support and engagement of the regions. 5

7 Asia-Pacific GF Membership This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map. Australia Brunei China Cook Islands Hong Kong, China India Indonesia Japan Korea Macao, China Malaysia Marshall Islands Nauru New Zealand Niue Philippines Samoa Singapore Vanuatu

8 The BEPS Project Feb 2013 Diagnosis: Addressing Base Erosion and Profit Shifting July Actions: Action Plan on Base Erosion and Profit Shifting Sep 2014 First Set of Deliverables: 3 Reports (Digital Economy, Multilateral Instrument) and 4 Instruments (Hybrids, Treaty Abuse, TP Intangibles, TP Documentation and CBC Template) Sep 2015 Second Set of Deliverables: Action 3 (CFC rules), Action 4 (Interest), Action 5 (HTP), Action 7 (PE Avoidance), Action 8-10 (TP), Action 11 (Economic Analyses), Action 12 (MDR), Action 14 (MAP) October 2015 Completion and Final Deliverables: Completion of BEPS Project and delivery of all supplemental reports to the G20 Finance Ministers in late

9 Strategy for a strengthened dialogue BEPS Project Engagement with partner economies 8

10 Next steps in APEC region Next Regional Network Meetings Sept - Nov 2015 Asia- Pacific Region Collaboration with SGATAR, ASEAN TF, Technical Committee on BEPS (planned for September 2015) Toolkits: practical input from the Region 2015: Tax Incentives; TP comparability; 2016: Indirect transfer of assets; TP documentation; Treaty negotiation 2017: Base eroding payments; profit shifting through supply chains; assessing BEPS risks 9

11 Tax Crimes and a Regional Academy Third leg of countering avoidance and evasion Fight against evasion, money laundering and other crimes Enhanced inter-agency and international cooperation improving capacity to fight illicit flows Sharing their new skills and knowledge within their agencies Proposed regional academy to be launched by APEC, OECD and partners for benefit of region 10

12 Key issues for APEC region Support for EOI and AEOI work in Global Forum Direct engagement in BEPS work and particularly BEPS implementation by member countries Support for a possible APEC Tax Academy on tax crimes and other crimes. 11