Tag: OECD

The OECD (Organization for Economic Co-operation and Development) is a multilateral organization founded in 1961. OECD provides a forum for representatives of countries to discuss and attempt to coordinate economic and social policies. It has an especially significant role in international tax matters.

G7 Support for OECD's proposal on a Global Tax Reform - Pillar I and II

G7 Support for OECD’s proposal on a Global Tax Reform – Pillar I and II

The G7 has agreed to back an international agreement on global tax reforms aimed at ending the reign of tax havens and have big international companies start paying their fair share of taxes. Under Pillar One of the reform, multinationals will be required to pay tax in the countries where they sell there products – and not just where they have their headquarters. The rules would apply to largest global firms with at least a 10% profit margin – and would see 20% of profit above the 10% margin reallocated and taxed in market countries. Under Pillar Two, a global minimum tax of 15% will be applied on corporate income on a country by country basis, creating a more level playing field.  – The G7 comprises of US, UK, Canada, France, Germany, Italy and Japan. EU and the heads of the IMF, World Bank Group, OECD and FSB – G7 FMCBGs_communique_-_5_June ... Read more
New Beneficial Ownership Toolkit will help tax administrations tackle tax evasion more effectively

New Beneficial Ownership Toolkit will help tax administrations tackle tax evasion more effectively

A beneficial ownership toolkit was released 20. May 2019 in the context of the OECD’s Global Integrity and Anti-Corruption Forum. The toolkit, prepared by the Secretariat of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes in partnership with the Inter-American Development Bank, is intended to help governments implement the Global Forum’s standards on ensuring that law enforcement officials have access to reliable information on who the ultimate beneficial owners are behind a company or other legal entity so that criminals can no longer hide their illicit activities behind opaque legal structures. The toolkit was developed to support Global Forum members and in particular developing countries because the current beneficial ownership standard does not provide a specific method for implementing it. The toolkit covers a variety of important issues regarding beneficial ownership, including: the concepts of beneficial owners and ownership, the criteria used to identify them, the importance of the matter for transparency in the financial ... Read more
Transfer Pricing in the Mining Industry

Transfer Pricing in the Mining Industry

Like other sectors of the economy, there are base erosion and profit shifting risks in the mining sector. Based on the ongoing work on BEPS, the IGF (Intergovernmental Forum on Mining) and OECD has released guidance for source countries on transfer pricing in the mining sector. The transfer pricing and tax avoidance issues identified in the sector are: 1. Excessive Interest Deductions Companies may use related-party debt to shift profit offshore via excessive interest payments to related entities. “Debt shifting” is not unique to mining, but it is particularly significant for mining projects that require high levels of capital investment not directly obtainable from third parties, making substantial related-party borrowing a frequent practice. 2. Abusive Transfer Pricing Transfer pricing occurs when one company sells a good or service to another related company. Because these transactions are internal, they are not subject to market pricing and can be used by multinationals to shift profits to low-tax jurisdictions. Related-party transactions in mining ... Read more
Guidance for Tax Administrations on the Application of Guidance on Hard-to-Value Intangibles

Guidance for Tax Administrations on the Application of Guidance on Hard-to-Value Intangibles

A new report from the OECD contains guidance for tax administration on the application of the approach to hard-to-value intangibles (HTVI), under BEPS Action 8. This new guidance present the principles that should underlie the application of the HTVI approach by tax administration, with the aim of improving consistency and reduce the risk of economic double taxation. The new guidance also includes a number of examples clarifying the application of the HTVI approach in different scenarios; and addresses the interaction between the HTVI approach and the access to the mutual agreement procedure under the applicable tax treaty. guidance-for-tax-administrations-on-the-application-of-the-approach-to-hard-to-value-intangibles-BEPS-action-8 ... Read more
Revised guidance on the profit split method from the OECD

Revised guidance on the profit split method from the OECD

June 2018 the OECD released revised guidance on the profit split method. The new guidance will be incorporated into the OECD Transfer Pricing Guidelines, replacing the previous text on the transactional profit split method in Chapter II. The revised guidance retains the basic premise that the profit split method should be applied where it is found to be the most appropriate method to the case at hand, but it significantly expands the guidance available to help determine when that may be the case. It also contains more guidance on how to apply the method, as well as numerous examples. revised-guidance-on-the-application-of-the-transactional-profit-split-method-beps-action-10 ... Read more
Additional guidance on the attribution of profits to permanent establishments

Additional guidance on the attribution of profits to permanent establishments

The OECD has released additional guidance on the attribution of profits to permanent establishments. This additional guidance sets out high-level general principles for the attribution of profits to permanent establishments arising under Article 5(5), in accordance with applicable treaty provisions, and includes examples of a commissionnaire structure for the sale of goods, an online advertising sales structure, and a procurement structure. It also includes additional guidance related to permanent establishments created as a result of the changes to Article 5(4), and provides an example on the attribution of profits to permanent establishments arising from the anti-fragmentation rule included in Article 5(4.1). See also the 2008 Guidance and 2010 Guidance. additional-guidance-attribution-of-profits-to-permanent-establishments-BEPS-action-7 ... Read more
OECD Transfer Pricing Guidelines 2017 - New version

OECD Transfer Pricing Guidelines 2017 – New version

OECD Transfer Pricing Guidelines 2017 – New version The OECD Transfer Pricing Guidelines for Multinational Enterprise and Tax Administrations provide guidance on the application of the “arm’s length principle”, which is the international consensus on transfer pricing, i.e. on the valuation for tax purposes of cross-border transactions between associated enterprises. In a global economy where multinational enterprises (MNEs) play a prominent role, transfer pricing continues to be high on the agenda of tax administrations and taxpayers alike. Governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation that may result from a dispute between two countries on the determination of the arm’s length remuneration for their cross-border transactions with associated enterprises ... Read more