As discussion turned to the final OECD BEPs reports, comments were made about how the OECD’s recommendations failed to cover issues considered most important by developing countries, which the UN now aims to take the lead in addressing.
The OECD had included non-member developing countries in BEPS discussions on an equal footing but there remains feelings that developing countries’ perspectives weren’t fully included.
“One of the issues for developing countries at the OECD: We are participants, we can talk but we can’t vote. Whether what we say is heard and inputted, is up for discussion,” said a participant at the committee session. (Because of the non-public nature of the meetings, reporters were asked by the UN not to identify specific speakers.)
It was clear from participants’ comments that people did not see the OECD work as conclusive.
The UN subcommittee on BEPS submitted proposals detailing the areas of international tax and transfer pricing, neglected by the OECD in the BEPS report, that are important to developing countries.
These areas were specified as taxation of services, taxation of capital gains and taxation incentives.
The BEPS subcommittee covered these topics in the recent UN publication on protecting tax bases, which is targeted at developing countries. It aims to compliment the OECD BEPS work, by identifying the most suitable options for developing countries.
The committee continues to place itself as a counterpoint to the OECD in covering areas the OECD has neglected, usually in relation to developing countries. This can be seen in agenda items including arbitration and clarifying the role of software in royalties.
Two horse race
Already this year at the financing for development conference in Addis Ababa, Ethiopia, there was a push from the G77 for a new international tax agency fronted by the UN. This proposal was rejected by UN delegates in favour of the UN committee of tax experts meeting twice a year instead of once a year.
Despite this, the debate that the OECD is not truly representing developing countries’ perspectives, favouring developed countries, with the UN providing a more inclusive forum, continues.
Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, predicted that NGOs and tax activists would not be satisfied with the final BEPS guidance’s efforts to improve international tax policy for developing countries.
The UN is unlikely to be seen as an equal, in terms of policy development, with the OECD because of its more limited resources. This issue was raised by several participants at the committee session. And despite the new mandate for the committee to meet more frequently, the secretariat of the Committee is being reduced from three to two members from next year.
