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2015/SFOM13/018 Session: 4

Exchange of Information and Tackling Base Erosion and Profit Shifting

Purpose: Information Submitted by: OECD

13th Senior Finance Officials’ Meeting Bagac, Philippines

11-12 June 2015

APEC SFOM

SESSION 4:

ADVANCING FISCAL

TRANSPARENCY AND REFORMS

EXCHANGE OF

INFORMATION AND

TACKLING BASE EROSION

AND PROFIT SHIFTING

RICHARD PARRY, OECD

• Challenge of dealing with international tax

avoidance and evasion requires global co-

operation

• 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

Issues

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

Age of Transparency

3

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

Automatic Exchange of Information

4

• 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.

Co-operation

5

Asia-Pacific GF Membership

Australia

Brunei

China

Cook Islands

Hong Kong, China

India

Indonesia

Japan

Korea

Macao, China

Malaysia

Marshall Islands

Nauru

New Zealand

Niue

Philippines

Samoa

Singapore

VanuatuThis map is for illustrative purposes and is without prejudice to the status of

or sovereignty over any territory covered by this map.

7

The BEPS Project

Feb 2013

• Diagnosis: “Addressing Base Erosion and Profit Shifting”

July 2013

• 15 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 2015

8

Strategy for a strengthened dialogue

BEPS Project – Engagement

with partner economies

• 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

Next steps in APEC region

9

• Third leg of countering avoidance and evasion

• Fight against evasion, money laundering and other crimes

• Enhanced inter-agency and international co-operation 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

Tax Crimes and a Regional Academy

• 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

Key issues for APEC region