The voluntary programme is in its second pilot phase.
Participants are multinational enterprises within the scope of
CbCR in Austria, Belgium, Denmark, Finland, Germany, Ireland,
Luxembourg, Norway and Poland, as well as to companies
headquartered in the eight countries it opened to from January
2018. The programme is likely to expand in the future, too.
"We really feel that this is a great initiative," says Danny
Houben, who coordinated Shell's participation in ICAP. "This is
something that is the future."
"Engaging in a collaborative way with the tax authorities
early on and getting certainty is really something that can
prevent controversy in the future, especially in the current
era regarding very rapidly changing rules in the tax space, and
also tax challenges in digitalisation that we see coming," he
Companies that successfully completed the ICAP pilot are
given the status of 'low-risk' taxpayer following intensive
discussions and information sharing with tax authorities from
countries including Australia, Canada, Italy, Japan, the
Netherlands, Spain, the United Kingdom and the United
"ICAP is a high-level risk assessment," says Rocío
Bermúdez, tax global practices & transfer pricing
senior manager at Repsol. "It's a multilateral control, but it
cannot be seen as a proper tax audit because it takes place in
advance. The participant tax authorities check if you are
compliant with standards. So no matter what the standards are,
ICAP can help the company to be in line with them; this would
allow groups to avoid double taxation and to prevent/reduce
further litigation, etc."
"In this rapidly changing environment that we are facing in
the tax world, it's a very useful tool to get tax certainty,
which at the end of the day is the late-motive of this process,
by enabling an efficient way of solving tax disputes," she
The OECD envisaged the programme as the positive side to the
multitude of information sharing requirements such as
country-by-country reporting (CbCR) it has encouraged
governments to implement in the past few years.
The fact that it is a multinational programme is its great
appeal. While being in a room with tax authorities from
multiple countries may sound daunting, participating companies
told ITR this helped them to explain their tax
structure and get different authorities thinking in the same
This effectively eliminates the chance of double taxation
between participating countries, by allowing companies to
explain transfer pricing (TP) structures to tax authorities
that might previously have wrangled over the same portion of
income is very beneficial.
"The main benefits we saw in this pilot is the goodwill
built between MNEs and tax authorities and the goodwill and
knowledge built among tax authorities," says Matteo Crispi,
group international tax and transfer pricing director at
Italian food company Barilla. "[Another benefit was] having the
chance to work in advance, collaborating transparently
simultaneously with more tax authorities on the same table, to
discuss our transfer pricing model where MNE and tax
authorities can better understand each other's challenges and
ways of working.
Further benefits of ICAP
The main benefit of participating in ICAP is not just
reducing the risk of double taxation, but the certainty it
provides for the future – and the speed at which
participation can achieve this compared to traditional routes,
such as advance pricing arrangements (APAs).
"We had a fast track to open a bilateral APA between the US
and Italy," says Gianluca Tagliavini, group VP tax at Barilla.
"Normally it can take longer than a year to have the first
discussion. [Through ICAP], we had the opportunity in few
months to have the first preliminary understanding between the
US tax authority and the Italian tax authority. The spirit of a
successful ICAP is that of trust, transparency and
collaboration. This is a very important aspect to speed up the
processes in order to reach tax certainty"
All of the companies ITR spoke to for this article
note an improvement in their relationship with the tax
authorities. Houben also comments that he found the experience
of cooperating with other MNEs useful.
"The outcome has been very positive, not only because of the
fact that you can be qualified as a low-risk taxpayer in those
jurisdictions which review your company, but also because of
the intangibles that are built during the process," says
"For example, you can get a much more transparent and
trustful relationship with the tax authorities," she continues.
"This programme gives the opportunity to explain your
country-by-country report, show your tax policies, tax control
framework, are. [To show] that we are a company that is looking
forward to collaborating with the tax authorities, that just
want to be compliant and make things easier."
There are also benefits for companies in dispute with
countries not even involved in ICAP or the Forum on Tax
Administration, says Achim Pross, head of the international
co-operation and tax administration division at the OECD.
"There are some indirect benefits that flow and if you take
them all together, I think it's quite important," he tells
"There is also an upside for [companies] beyond the [ICAP]
jurisdictions, of being able to say that what we've gone
through this process, we run one structure around the world. We
have some of the most sophisticated tax administrations looking
at this all together. Why is it that you in country X feel what
was good enough for the [ICAP countries] is not good enough for
How does the ICAP process work?
Any multinational company within the scope of CbCR
can theoretically participate in ICAP if it is
headquartered in the countries mentioned above.
Companies enter the 'pre-entry' stage after
expressing an interest in the programme to the tax
authority in the country of their headquarters, which
becomes their 'lead' tax administration. The tax
authority will then assess information it already has
on that company – such as a CbC report,
financial statements, APAs and information on group
structure – and may make additional
Following this, the authority and company will have
discussions about the scope of the ICAP risk
assessment, such as what periods of time will be
covered and potential risks – in addition to
TP and permanent establishment PE risks, which are all
covered – the company is willing to identify.
There is very little cost associated with the pre-entry
"For companies of a decent size and with a certain
level of maturity in terms of tax data, tax strategy,
tax control framework and tax management can consider
it as a very interesting option in order to get tax
certainty and get a better relationship with the tax
authorities," says Bermúdez.
The lead tax administration begins the process of
sharing relevant information with other
ICAP-participating tax authorities and checking the
viability of including the company in the programme. As
long as two tax authorities, plus the lead tax
administration, are happy to cover the company's risks
in ICAP, then the company can move on the next stage:
"The scoping stage provides an opportunity for the
lead tax administration and other covered tax
administrations to review a summary of all of the MNE's
transactions relevant to the covered risks, and
determine whether any should be excluded from the scope
of their ICAP risk assessment," says the ICAP pilot
handbook 2.0. "This requires the MNE to provide a
scoping documentation package."
This part of the process takes four to eight weeks
and helps set limits on what information the company
can be asked for.
After this, all parties move on to risk assessment
and issue resolution, which the OECD says typically
takes no more than 20 weeks – though taxpayers
ITR spoke to did see this stage elongated for
This is article is part of a five-part series on ICAP.
ITR spoke to multinational companies about their
experiences of the programme, chronicling the positives and
negatives of ICAP. This led to two case studies of
companies’ involvement and an exploration of the
future of the programme.