Speaking to his last annual congress of the International Fiscal Association (IFA) before he leaves the OECD early next year, Owens confirmed that a global forum on transfer pricing would hold its first meeting in March next year. He added that as globally accepted standards for VAT were needed, a similar body for that topic was also a possibility, too. The groups would bring together not only OECD member countries but those outside the organisation as well.
The comments came during a session at the IFA congress where he and Mary Bennett, who is leaving her post as head of the OECD’s tax treaties and transfer pricing division in October, outlined the challenges they see facing the multilateral organisation's tax work.
Owens spoke about four tasks for the Committee on Fiscal Affairs, which agrees on the agenda for the OECD's Centre for Tax Policy and Administration (CTPA). He was the CTPA's first director 20 years ago and is retiring early next year.
The CTPA director said the work had to address how the OECD intensifies engagement with the Bric countries (Brazil, Russia, India and China), other big economies who are not members of the organisation and less developed countries, a point also mentioned by Bennett; how the organisation deals with value-added tax; how global reporting standards for banks and financial institutions could be developed and what role tax could play in reducing inequalities in income and wealth.
The OECD already has two initiatives for engaging with members and non-members - the Global Forum on Tax Transparency and Exchange of Information and the Global Forum on Tax Policy and Administration. The transfer pricing forum would make that three, Owens said. “The OECD has a strong commitment to ensure that the UN Committee on International Tax Cooperation is successful,” he added.
Owens also said he hoped it would be possible to create globally accepted standards for VAT. “VAT has tended to be the Cinderella of tax. We have to change that,” he said. The standards would have to be capable of combating abuse, avoiding the risk of double taxation and double non-taxation, and not being a barrier to cross-border investment.
On banks and financial institutions, Owens said the development of global reporting standards for these types of organisation would be a good thing. The standards should include effective exchange of information while minimising the compliance burden for taxpayers. He pointed out that different policies were being implemented in other parts of the world, such as the Foreign Account Tax
Compliance Act in the US and the EU Savings Directive.
And Owens suggested a list of tax policy measures that could be used to reduce inequalities of income and wealth. These included the introduction of more property taxation, improvements to the way exchange of information works and more use of consumption taxes.
As well as better engagement between the OECD and countries that are not members of the organisation, Bennett's discussion of challenges for the organisation referred to a requirement for greater clarity and consensus on the treatment of the transfer pricing aspects of intangibles, which the CTPA started a project on in 2010; how transfer pricing applies to financial transactions and possible updates of the OECD's Model Tax Convention to deal with changing views on the topics of beneficial ownership, which was the subject of a discussion document this year, and permanent establishment.
Bennett, who is stepping down as head of the CTPA's tax treaty and transfer pricing division in October, also raised the possibility of peer reviews of how countries interpret tax treaties, noting that the OECD already carries them out to measure the progress different countries have made on exchange of information. “It is imperative to deepen dialogue with developing countries about treaty norms,” she said.
Today's seminar, which went on to look at three case studies on how the principle of liable to tax is treated in different jurisdictions such as France, India and the US was different because the attendance consisted not only of IFA delegates but also the officials attending the annual tax treaties meeting at the OECD's Paris headquarters tomorrow. Two hundred and thirty two administrators from 96 countries will be at that meeting.
