THE OECD-G20 PARTNERSHIP ON TAX
More than ever it is clear that with robust tax transparency standards now established, the focus of OECD andG20 efforts must be on ensuring their consistent and global implementation.
The outstanding results delivered over the last decade to progress the international tax agenda would not have been possible without the partnership established between the OECD and the G20 in this area. In just7 years, we have seen the development and global adoption of the tax transparency standards to combat tax evasion, as well as the delivery of a comprehensive package of measures to update the international tax rule sand tackle BEPS (Base Erosion and Profit Shifting). Setting standards and making commitments to implement them is just the start of our work together however. This year, the focus of the international tax agenda has shifted to implementation of these standards, while the G20 members are also working with the OECD to consider how tax policy can be used as a tool to achieve their broader objectives of strong, sustainable, balanced but also innovative, clean and inclusive growth.The impact of tax evasion and the use of off shore structures to hide the true ownership of assets was brought back to the headlines this year with the release of the “Panama Papers”. More than ever it is clear that with robust tax transparency standards now established, the focus of OECD andG20 efforts must be on ensuring their consistent and global implementation– no country should be able to benefit from failing to meet their international commitments and there should be “no place left to hide”. Reinforcing their efforts in this area, the G20 Finance Ministers endorsed in July the objective criteria developed by the OECD to identify non-cooperative jurisdictions(against which defensive measures will be subsequently considered by theG20), while we also saw key remaining jurisdictions commit to implement the automatic exchange of financial account information no later than 2018. More than 100 countries and jurisdictions have now made that commitment,and the OECD and G20 members have agreed on the procurement of a common transmission system that will be available to all interested countries for the secure, global exchange of this data. To the benefit of our citizens and of our public finance, the near prospect of automatic exchange of tax information has already generated around 50 billion euros in additional revenues through voluntary disclosure programme. Meanwhile, the OECD continues to work intensively with the Global Forum on Transparency and Exchange of Information for Tax Purposes, starting with its developing members, to provide all jurisdictions with tools and practical guidance adapted to their circumstances to exchange tax information effectively;and, partners with UNDP and several advanced economies, in the framework of the Tax Inspectors without Borders initiative, to provide assistance to tax administration in developing countries.
In parallel, since 2013, the OECD andG20 have joined forces again to tackle the loopholes and mismatches in the international tax rules that facilitated the shifting of corporate profits away from the locations of the underlying economic activity and value creation, and often into low or no-tax jurisdictions through Base Erosion and Profit Shifting – in effect leading to the double non-taxation of profits posted by big corporations. With the agreement by the G20 on a package of measures to counter BEPS in October2015, the OECD and G20’s work on this issue has now moved into a new phase this year, opened up for the direct involvement, on an equal footing, of all interested countries and jurisdictions to work together on this global issue. This new Inclusive Framework on BEPS had its inaugural meeting in June in Kyoto,with 85 countries and jurisdictions now committed to implementing the BEPS package and working together on its remaining elements and implementation.A critical part of this stage of the OECD/G20 BEPS Project will be the monitoring of implementation of the 4 agreed BEPS minimum standards, tackling core issues such as tax treaty abuse and harmful tax practices relating to preferential regimes and lack of transparency around taxrulings issued by governments.
2016 will also mark a new frontier for the OECD-G20 tax partnership, with theG20 Tax Symposium that took place in Chengdu, China, in July, in the margins of the G20 Finance Ministers meeting,dedicated to exploring tax policy tools to support innovation and inclusive growth, as well as to ensure tax certainty that will facilitate trade and investment.The Symposium, hosted by China and Germany (incoming G20 2017 Presidency)with OECD’s support, facilitated a dynamic discussion between Ministers who identified a number of key areas of future work, and asked the OECD to work with other relevant international organisations to further explore these potential tax policy approaches in a series of report to be delivered in 2017 and beyond and to make relevant policy recommendations to the G20 membership in those areas.
The progress emerging from theOECD-G20 partnership on tax continues to dramatically alter the international tax landscape, ensuring that it is fit for the 21stcentury. The challenges ahead are not only to level the playing field by ensuring a widespread and effective implementation of existing standards, but also to shape the tax policy tools of the future that will establish new paths for growth in our global and inter-connected economy. Our continued commitment to work together and embrace a global dialogue on these issues will pave the way for better policies for better lives, OECD’s mantra.