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OECD Releases Comments On Offshore Indirect Transfers Toolkit

by Ulrika Lomas,, Brussels

07 December 2017

The OECD has newly released the comments it received on a consultation on the draft toolkit on the taxation of offshore indirect transfers.

The draft toolkit was designed to help developing countries address concerns surrounding the tax treatment of offshore indirect transfers of assets. Releasing the toolkit, the OECD said the tax treatment of "offshore indirect transfers" (OITs) – the sale of an entity located in one country that owns an "immovable" asset located in another country, by a non-resident of the country where the asset is located – has emerged as a significant concern in many developing countries.

The OECD explained that it has become a relatively common practice for some multinational corporations trying to minimize their tax burden, but there is no unifying principle on how to treat these transactions, and the issue was not addressed in the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.

"This draft toolkit, 'The Taxation of Offshore Indirect Transfers – A Toolkit,'" the OECD said, "examines the principles that should guide the taxation of these transactions in the countries where the underlying assets are located. It emphasizes extractive (and other) industries in developing countries, and considers the current standards in the OECD and the UN model tax conventions, and the new Multilateral Convention. The toolkit discusses economic considerations that may guide policy in this area, the types of assets that could appropriately attract tax when transferred indirectly offshore, implementation challenges that countries face, and options which could be used to enforce such a tax."

The toolkit responds to a request by the Development Working Group of the G20, and is part of a series the Platform is preparing to help developing countries design their tax policies, keeping in mind that those countries may have limitations in their capacity to administer their tax systems. Previous reports have included discussions of tax incentives, and external support for building tax capacity in developing countries. This series complements the work that the Platform and the organizations it brings together are undertaking to increase the capacity of developing countries to apply the OECD/G20 BEPS Project.

Responses were received from Aneri Dani & Associates; the Business and Industry Advisory Committee to the OECD; the BEPS Monitoring Group; the Confederation of British Industry; the China State Administration of Taxation; Deloitte; the International Chamber of Commerce; the Government of India; the International Tax and Investment Center; the Jubilee USA Network; KPMG; PwC; Repsol; Sergio Guida; the Silicon Valley Tax Directors Group; the Tax Executives Institute; Transfer Pricing Economists for Development; and the United States Council for International Business.

TAGS: Offshore | tax | India | tax incentives | China | offshore | transfer pricing | G20 | standards | Investment | Work | Invest | Investment | Tax | BEPS

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