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BEPS: OECD insists it is engaging with developing countries

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More than 300 senior tax officials from more than 100 jurisdictions and international organisations met in Paris on September 26 and 27 to discuss solutions to unintended double non-taxation caused by base erosion and profit shifting (BEPS).

“Participants discussed the content of the action plan on BEPS released on July 19 and ways through which developing countries can engage and provide input,” said an OECD press release.

“We need to address BEPS issues in order to maintain and strengthen the existing framework to eliminate double taxation, which is key for cross-border investments. The BEPS project is both exciting and challenging and we can work together to achieve concrete results in the next 18-24 months,” said Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration.

Saint-Amans also commented on the importance of this work for developing countries, noting that corporate income tax revenue makes up a substantial part of their total tax revenues.

Tax justice campaigners including ActionAid have stressed the importance of including developing countries in any process designed to tackle BEPS.

When G20 leaders endorsed the BEPS action plan last month, Toby Quantrill, ActionAid tax policy adviser, said the statement “still gives little assurance that these tax reform processes will respond to the needs of the world’s poorest countries”.

And Keith O’Donnell, Taxand board member and managing partner of Atoz – Taxand Luxembourg, said recent meetings hosted by bodies such as the OECD and G20 have failed to clarify how the BEPS process will include developing countries.

“The result leaves us somewhat unclear as to which is highest up the OECD’s priority list – is the BEPS initiative more about the public’s concern over multinational tax planning, or the concerns arising from profits being diverted away from developing countries?” asks O’Donnell.

Saint-Amans told delegates at the 13th International Tax Review Global Transfer Pricing Forum in New York that the 18-24 month timeframe, which has been criticised by many as too ambitious, will be achievable because of the top-down approach to the BEPS project.

“The BEPS project is being handled by governments and organisations such as the G20, whereas the intangibles project [for example] is being run by a working group involving tax experts involved in the tax market on a daily basis,” he said.

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