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OECD Welcomes EU Commission's Corporate Tax Plan

by Ulrika Lomas,, Brussels

02 April 2015

The European Commission's proposal for the automatic exchange of tax rulings would be "a revolutionary step" towards international tax transparency and the fight against base erosion and profit shifting (BEPS), Organisation for Economic Co-operation and Development (OECD) Secretary-General José Ángel Gurría has said.

His comments, during a discussion with members of the Committees for Tax Rulings and Economic and Monetary Affairs on March 31, 2015, came in response to the Commission's release of a package of transparency measures aimed at tackling corporate tax avoidance and harmful tax competition within the European Union.

The tax transparency package, which was released on March 18, 2015, sets out a number of measures that can be taken in the short-term, including establishing an increased link between taxation and economic substance, in line with ongoing talks being led by the OECD. However, more immediately, the Commission is in particular seeking to establish strict transparency requirements for tax rulings issued to companies by member states.

Asked if the European Union member states speak with one voice when discussing avenues to overcome shortcomings in tax legislation in the OECD, Gurría said: "Yes; because they all need the money." But he also warned against draw backs under pressure of aggressive lobbying. "Many people try to kill our initiatives. Let's move with one united front and beware of legal dentist who want to take the teeth out of the legislation," he said.

Discussing the OECD's efforts under Action 15 of its BEPS Action Plan, to agree a multilateral change to double tax agreements, Gurría noted the complexity of the issue due to the substantial increase in bilateral tax agreements over the last years: "In 2008 there were 14 bilateral tax agreements, now there are 3000. We aim at replacing all of these by one multilevel convention," he explained, adding: "We have to adopt the package as a whole."

Last, Gurría said that obliging multinational companies, as proposed by some Members of the European Parliament, to publicly report on their activities, profits, and taxes on a country-by-country basis is "a bridge too far at this stage" for the OECD: "I am afraid that this would not work. If we insist on total transparency, including naming and shaming, we might lose the battle. Moreover, we are also sensitive to the compliance costs."

TAGS: compliance | tax | investment | business | European Commission | tax avoidance | law | international financial centres (IFC) | Organisation for Economic Co-operation and Development (OECD) | enforcement | offshore | agreements | multinationals | legislation | tax planning | transfer pricing | advance pricing agreement (APA) | tax reform | standards | regulation | trade | European Union (EU) | Europe | Tax

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