OECD has announced further actions to be taken for efficient Base erosion and profit shifting (BEPS) implementation for the collaboration among the country members of the Organization and their jurisdictions of potential tax avoidance schemes which use the existing mismatches and gaps in the tax rules for shifting profits toward locations with lower or no taxes. The latest developments are targeted towards assuring certainty for both Multinational Corporations and tax administrations and require Country-by-Country (CBC) reporting.
The Inclusive Framework includes the newly approved updates to the results of the preferential regime reviews of the Forum on Harmful Tax Practices (FHTP) regarding BEPS Action 5.
The newly added guidance includes reports on two specific topics: the total consolidated group revenue definition as well as the question whether non-compliance with confidentiality and appropriate use or consistency conditions are considered systematic failure.
A complete set of the guides for proper CBC reporting is also included in the newly released documents. The documentation also includes a compilation of the different approaches which are adopted by the jurisdictions of the member countries regarding any issues within the guidance which allow different approaches. The documents will be updated with any new agreed upon regulation.
The newly updated conclusions regarding the preferential tax regimes.
The Inclusive Framework members are continuously showing progress in delivering the BEPS Action 5 international standard. In the Inclusive Framework from 2017, two Barbados preferential regimes along with the Credit for foreign earnings were found to be potentially harmful. As a result a letter from the Barbados Government was sent to assure that these regimes which fall within the FHTP timelines will be amended to meet the FHTP criteria. This has led to a change of the term “potentially harmful” from last year’s Framework to “in the process of being amended” for both regimes in the current issue of the official documentation.
Also, the Canadian regime of international banking centers which used to be defined as “potentially but not actually harmful” in the Progress Report back in 2004, is now been updated to “abolished” with the updated report from 2018.
The Inclusive Framework also includes the latest updated table of regime results.