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OECD response to BEPS gathers momentum

OECD response to BEPS gathers momentum

An international solution to base erosion and profit shifting (BEPS) moved a step closer at OECD discussions involving IRD officials last week, says Revenue Minister Todd McClay.

The Committee of Fiscal Affairs approved the final recommendations for the first set of actions that are due to be presented to Finance Ministers at a meeting of the G20 in September.

The BEPS Action Plan has seven deliverables due in 2014 and is on track to meet these targets. The deliverables relate to the following action points:
Addressing the Tax Challenges of the Digital Economy
Neutralise the Effects of Hybrid Mismatch Arrangements
Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance
Preventing the Granting of Treaty Benefits in Inappropriate Circumstances
Modifications of Chapters I, II and VI of the OECD Transfer Pricing Guidelines Related to Transfer Pricing Aspects of Intangibles
Modifications of Chapter V of the OECD Transfer Pricing Guidelines Related to Documentation
Developing a Multilateral Instrument to Modify Bilateral Tax Treaties

“It’s an indication of the global commitment to finding solutions that the OECD members are keeping on track with their tight deadline to deliver these actions,” Mr McClay says.

“There is no simple solution to BEPS.”

“The problem is that current international tax rules cannot effectively deal with highly mobile multinational operations working across different jurisdictions, so BEPS is only going to be solved through international co-operation.”

“New Zealand’s domestic tax laws are very strong in this area and include thin capitalisation rules, taxation of passive income of controlled foreign companies and a series of anti-arbitrage rules. These rules help to limit the ability of companies to shelter income.”

“Later this year New Zealand will also be attending the G20 summit in Brisbane. Of particular interest to attendees will be discussions around the tax implications of BEPS and the rapidly digitising world economy.”

“Our representatives at the OECD and G20 will continue to be deeply involved because New Zealand is committed to developing and being part of a strong global response,” Mr McClay says.


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