Panelists from the OECD, United States Department of the Treasury, and Her Majesty’s Treasury speaking at the Tax Center Policy Institute’s (“TCPI”) annual symposium in Washington, D.C. clearly messaged that the OECD’s action plan on Base Erosion and Profit Shifting, or “BEPS” as it’s been abbreviated by the tax industry, is gathering steam and moving quickly to meet aggressive timelines.
Specifically, the OECD has recently published a discussion draft on Transfer Pricing Documentation and a Template on Country-by-Country (“CbC”) Reporting, and will be publishing a discussion draft on the Tax Challenges of the Digital Economy in short order, among many other deliverables we can expect in a frenetic 2014 as part of the BEPS Action Plan. The window for public comments is brief in all cases, and the panelists were both thankful for the industry feedback they have received on CbC and encouraging of feedback on the Digital Economy publication to come. In fact, as one panelist, Will Morris—Director of Tax Policy for General Electric—explained, no one is going to articulate corporate taxpayers’ concerns for [them], so it’s incumbent upon multinational corporations to be engaged now and throughout the BEPS Action Plan process. This comment is not surprising, given the amount of buzz the CbC recommendations have garnered by transfer pricing practitioners, many of whom are concerned about the information requirements in the draft template. Some of this information, which is quite granular, such as the number of employees in each entity and the top earners’ compensation, clearly makes taxpayers nervous–not only with respect to the level of transparency governments are seeking, but also the cost of gathering and maintaining this information.
Robert Stack, Deputy Assistant Secretary (International Tax Affairs), United States Department of the Treasury, offered a different perspective—that “the overarching theme of CbC reporting is for [multinational corporations] to show all their cards to all tax authorities,” with the noble goal of reducing unnecessary examinations.
We don’t necessarily know exactly what the final reporting template will look like, but it’s clear that the OECD and its member nations are forging ahead, and taxpayers who may have concerns with any of the BEPS discussion drafts yet to come better raise their concerns rather quickly—and effectively—lest the BEPS ship leave them at the dock.