31 countries have just signed a multilateral agreement between competent authorities to cooperate in the automatic exchange of information on a country-by-country basis for tax purposes. The signing ceremony of this agreement marks an important milestone in the implementation of the OECD/G20 BEPS Project to Combat Tax Base Erosion and Transfer of Profits for Enhanced International Cooperation in Tax Matters.
Dn the framework of initiatives aimed at increasing transparency on the part of multinational enterprises, 31 countries signed on Wednesday 27 January 2016 the Multilateral Agreement between Competent Authorities on the Automatic Exchange of Declarations on a country-by-country basis, thus marking an important step in the implementation of the OECD/G20 BEPS Project to combat the erosion of tax bases and the transfer of profits, i.e. the transition to significantly enhanced international cooperation in tax matters.
The multilateral agreement paves the way for the rapid and uniform application of the new transfer pricing documentation rules set out under Action 13 of the BEPS Plan. Tax administrations will now be able to understand how MNEs structure all their transactions, while at the same time ensuring the confidentiality of the information exchanged.
"The country-by-country declaration will have an immediate impact on international co-operation in tax matters by increasing transparency on the operations of multinational enterprises," said OECD Secretary-General Angel Gurría. "The multilateral agreement provides for an exchange of information between tax administrations that will give them a comprehensive and unified view of key indicators of the activities of multinational enterprises. This is a major step towards our goal of ensuring that every company pays its fair share of taxes, and the BEPS Project is responsible for this breakthrough. »
Read the full speech (in English)
The OECD/G20 BEPS Project has detailed 15 priority actions to reform the international tax framework and ensure that profits are properly reported in the jurisdiction where the activities and related value creation take place. Problems related to the erosion of the tax base and the transfer of profits are of particular importance in developing countries, whose tax revenues depend heavily on corporate income tax, particularly that paid by multinational enterprises.
In November 2015, the leaders of the G20 countries agreed to the set of measures resulting from the BEPS Plan which represent an unprecedented opportunity to improve the efficiency of the international tax system. The package is the result of two years of joint work by all OECD and G20 countries and a dozen developing countries. Building on the adoption of the package, countries are now working to define and implement an inclusive framework for monitoring BEPS practices and related corrective measures, with support for the effective adoption of these measures. All interested countries and jurisdictions are invited to participate in this work on an equal footing.
With the country-by-country declarations, the tax authorities where a company operates will obtain a set of information each year, based on the accounts for the year 2016. This information concerns the worldwide distribution of turnover made and taxes paid, as well as other indicators of the location of economic activities within a multinational group, in order to enable the administrations to understand what activities are carried out and where they are carried out. The information will be collected by the country of residence of the multinational group, and will then be exchanged via an information exchange mechanism supported by the agreements signed today. The first exchanges will start in 2017-2018, on information concerning the year 2016. However, should information not be exchanged properly, the report on Action 13 on transfer pricing documentation provides for an alternative reporting mechanism to ensure that all stakeholders are put on an equal footing.
More information on the Multilateral Agreement (in English)
(Source: OECD - 27 January 2016)
