There’s still a lot to do on Base Erosion and Profits Shifting

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The BEPS Monitoring Group (BMG), a body of which I am a member and which is led by TJN Senior Adviser Prof Sol Picciotto, is a civil society body monitoring the OECD's Base Erosion and Profit Shifting (BEPS) project.

The Group has now produced a new joint statement with Global Alliance for Tax Justice (GATJ) on what still needs to be done with the BEPS process:

“The BMG, together with the Global Alliance for Tax Justice, has prepared a statement of Key Points on Tax Issues, summarising our views on the BEPS Action Plan proposals to date. This is being presented by the C20 Steering Group to the G20 Sherpas on 16-17 June 2015. It has also been sent to Pascal de St Amans, Head of the OECD Centre for Tax Policy and Administration, who has forwarded it to the Chair of the Committee on Fiscal Affairs, which is responsible for the BEPS Project.”

The statement is worth reading in full but highlights will have to do here:

“The BEPS project has the potential to put an end to tax avoidance by multinational enterprises through tax havens, and so help to raise corporate tax revenues in developing countries and developed countries alike.”

The process is still underway. How is it doing so far? The BMG notes:

“Civil society organisations were encouraged by the G20's efforts to reform the international tax system, and its mandate to create a foundation for international tax rules suited for the 21st century. However, following the G20 International Tax Symposium in Istanbul, we have become concerned that the package of proposals being negotiated in the project on Base Erosion and Profit Shifting (BEPS) could make an already bad situation worse.”

And, also importantly:

“The project has been led by what is often referred to as the “rich countries' club”, the Organisation for Economic Cooperation and Development (OECD), with the added participation of other G20 countries, and more recently some other developing countries and regional tax administration networks. There have been consultations on most of the draft proposals, yet these discussions have generally been dominated by representatives of big business and lobbyists from the tax avoidance industry. Although outgunned by other interest groups, civil society has provided detailed and constructive comments on all the proposals. However, civil society organisations are concerned that these comments and similar concerns raised by the developing countries are largely being ignored. Further negotiations about international tax standards, beyond the conclusion of the current BEPS package, urgently require an all-inclusive approach, where all governments participate on an equal footing. Therefore we are also calling for reform of the governance of international cooperation in tax matters.”

The statement, for those interested in the details of the state of play of international tax reforms, contains a wealth of further analysis and information.

In particular regarding country-by-country reporting it says:

Although the template for Country by Country Reports is good, the threshold of 750m euro is too high. The arrangements for filing and access are also weak, all countries need access to these reports, yet that is currently not going to happen. There is no convincing argument to suggest these reports would contain commercially confidential information and hence they should be published. This would facilitate research and analysis of whether the international tax rules are meeting their stated objects, and reassure the public.


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