Rick Minor Archives

ICC Warns Against Double Taxation in BEPS Action Plan

Published on November 4, 2014

4879_image002The International Chamber of Commerce (ICC) has expressed concern that the Organization for Economic Co-operation and Development (OECD) Action Plan on combating Base Erosion and Profit Shifting (“BEPS”), mandated by the G20, may inadvertently incur severe collateral damage on compliant taxpaying companies of all sizes as a result of well-meaning measures undertaken unilaterally by states to mitigate double-non-taxation.

While ICC fully supports the BEPS Action Plan and actively engages with the OECD and the UN on the issues at hand, concern was raised during back-to-back meetings with the United Nations (UN) Committee on International Cooperation in Tax Matters at UN Headquarters in Geneva last week.

Stressing that taxation systems should be sound and stable – to encourage transparency, efficiency and predictability and to incentivize long-term investment, job creation and economic growth – ICC advises governments and policymakers to take the following into consideration:

  1. ICC strongly believes that several of the 15 BEPS Action Points are interdependent and recommends an overall perspective and coordination of the various recommendations – including the 2014 deliverables of Phase 1 in Phase 2 of the project.
  2.  ICC calls for a coordinated implementation of the combined deliverables of the G20/BEPS project on a multilateral basis with a consensus approach in order for the solutions to be consistent and uniformly applied on an international level. ICC therefore cautions against implementation of domestic tax legislation through unilateral and divergent actions which risk leading to disparate rules, increased complexity and double taxation.
  3. ICC urges mitigating the increased unavoidable and foreseeable risk of double taxation via a solid dispute resolution mechanism, with mandatory agreements forcing competent authorities to agree on how to tax certain transactions, or simplified, how to split the ‘tax cake.’

ICC strongly opposes tax fraud and tax evasion but warns that it is crucial to distinguish these illegal activities from the use of lawful methods of tax planning and tax management, provided they are aligned with commercial and economic activities.

More on ICC’s website.

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

ICC Hails Progress on Automatic Exchange of Information Agreement

Published on October 30, 2014

The International Chamber of Commerce has welcomed an agreement reached this week by over 90 countries to automatically swap tax information, describing the step towards achieving transparency in this area as an important milestone for the international tax reform agenda. The new OECD/G20 standard on automatic exchange of information was endorsed in Berlin yesterday by all OECD and G20 countries as well as major financial centers participating in the annual meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes. More than 50 countries additionally agreed to put exchange systems in place by the year 2017.

More on the ICC’s website

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

BIAC Welcomes FTA Focus on Eliminating Double Taxation

Published on October 28, 2014

Participants to the OECD Forum on Tax Administration (FTA) meeting on October 23 and 24 in Dublin agreed that ever-greater cooperation is necessary to implement the results of the OECD’s project on Base Erosion and Profit Shifting (BEPS) and Automatic Exchange of Information.

The Business and Industry Advisory Committee (BIAC) to the OECD welcomed the opportunity to attend part of the FTA, which gathers tax commissioners from more than forty countries, enabling them to identify, discuss and influence relevant global trends and develop new ideas to enhance tax administration around the world. BIAC engaged with the FTA on the issue of improving tax control frameworks.

Will Morris, chair of the BIAC Tax Committee, noted: “We very much welcome the commitment of the tax authorities present to improve the Mutual Agreement Procedure for resolving tax disputes. This shows that the OECD and FTA remain focused on continuing to eliminate double taxation, as well as on preventing double non-taxation. We also welcome the continued emphasis on the cooperative compliance program. One of the best ways of preventing base erosion and profit shifting is by building trust between tax authorities and taxpayers, and that is exactly what cooperative compliance does. This was a positive and very useful meeting.”

USCIB, BIAC and the OECD organize an annual tax conference, the most recent of which took place in June, which reviews the OECD’s work on BEPS, under which governments are seeking to curtail what they perceive as growing under-taxation of international corporate income.

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

USCIB Remembers Richard M Hammer Longtime Steward of Tax Policy

Published on October 10, 2014
4850_image001
Richard M. Hammer

It is with great sadness that we mark the passing of Richard M. Hammer, who served for 13 years as USCIB’s international tax counsel following a 40-year career at Price Waterhouse, one of the predecessor firms of PricewaterhouseCoopers. While at PW, he also chaired USCIB’s Taxation Committee for many years. Hammer passed away on October 7 at age 84.

“Dick Hammer was a leading light in global tax policy,” said USCIB President and CEO Peter Robinson. “He brought a career’s worth of insight into the intricacies of multinational tax practice, the details of tax treaties and the importance of the multilateral structures that uphold them. What’s more, he was a true friend and mentor, especially to the USCIB staff members who worked with him and came to trust his wisdom and guidance.”

For 16 years, Hammer chaired the Taxation Committee of the OECD’s Business and Industry Advisory Committee (BIAC), through which the business community provides input to the OECD and its member governments on vital international tax issues. He advised the governments of Kazakhstan and the Russian Federation on the modernization of their tax systems, and he made major contributions to China’s tax law and regulation, serving as an advisor to the Chinese government from 1981 to 1993. He also acted as consultant to the Barbados ministry of international trade and has served as president of the International Fiscal Association, the premier global tax think-tank.

Memorial services were held for Hammer today in New York. He is survived by his wife Ellen, by his son Jeffrey and Jeffrey’s wife, Heidi, and by three grandchildren. Friends and colleagues of Dick Hammer are encouraged to sign an online guest book.

OECD Releases First Set of Deliverables on BEPS Project

Published on September 17, 2014

4833_image002Launched last year to revisit the rules applicable to the taxation of cross-border enterprises, the OECD (Organization for Economic Cooperation and Development) project on “base erosion and profit shifting” (BEPS) aims to prevent incidences of non-taxation by developing a single, coherent and fair set of rules that ensure companies pay what they owe without creating unnecessary costs or double taxation.

Yesterday, the OECD released its first set of BEPS recommendations to the G20.

The Business and Industry Advisory Committee (BIAC) issued the following media release:

BIAC broadly welcomes the first set of BEPS consensus reports and recommendations released by the OECD on seven areas of the BEPS Action Plan.

The OECD released yesterday its first recommendations for a co-ordinated international approach to combat tax avoidance under the OECD/G20 Base Erosion and Profit Shifting Project (BEPS).

We welcome the acknowledgement from the OECD that the proposals contained within the seven deliverables are not yet formally finalized as they may be impacted by some of the decisions taken with respect to the 2015 deliverables with which they interact.

We also fully support the OECD’s recognition that rules should not result in double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity, which is more important than ever to protect and grow our global economy.

With the release of the seven 2014 deliverables, we caution against governments acting too rapidly to implement recommendations into domestic tax legislation until further implementing guidance has been provided and the interactions with future action items is understood. This would risk creating a series of disparate rules that could negatively impact trade and investment.

BIAC looks forward to continuing its close and constructive work with the OECD on its BEPS project throughout 2015, representing the important views of the international business community.

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

Action on Global Tax Reform

Published on July 22, 2014

tax penAs part of the project to rewrite global tax rules, the Organization for Economic Cooperation and Development (OECD) released commentary on Common Reporting Standards, a milestone in the effort to help countries implement an automatic exchange of information (AEOI) regime. AEOI would allow governments to automatically collect financial data from banks for tax purposes.

USCIB and the Business and Industry Advisory Council (BIAC) support OECD and G20 efforts to ensure taxpayers pay what they owe and appreciate the need for automatic exchange of information. The OECD must continue working with the private sector to ensure that the costs borne by businesses are taken into account and that business will need time to adapt systems to the AEOI requirements.

In September 2013, G20 leaders committed to AEOI as the new global standard of cooperation between tax administrations and supported the OECD’s work aimed at presenting a single global standard. Progress made on that front this year will go a long way toward implementing the policies necessary for identifying customers’ tax residences and exchanging relevant information between tax authorities.

Countries’ implementation guidance must also provide business with sufficient time to implement the significant new obligations that will be imposed on business by the common reporting standard.

“BIAC is particularly pleased that the business community, the OECD and its member governments were able to engage in a consistently frank and open dialogue that led to a result that reduced the potential burdens on business while achieving the OECD’s tax compliance objectives,” said Will Morris, chair of BIAC’s Taxation and Fiscal Policy Committee. “This dialogue must continue if the CRS is to be implemented consistently by the adopting jurisdictions.”

The Common Reporting Standard is based on a similar information-gathering program developed by the United States, the Foreign Account Tax Compliance Act (FATCA). That U.S. policy acted as a catalyst for the move towards AEOI in a multilateral context.

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

ICC Advises Against Exit Taxes

Published on July 17, 2014

As some European countries consider adopting exit taxes to increase revenue, the International Chamber of Commerce issued a policy statement warning that exit taxes could seriously disrupt international business restructurings and movements of capital.

The ICC statement strongly advises against exit taxes regimes which generally seek to tax unrealized gains the moment a company’s seat or assets leave the country. USCIB contributed to the development of this statement.

“While the international community is currently debating a fundamental restructuring of the international taxation system, we see that as a means to increase their revenues more countries are considering levying additional taxes, such as exit taxes,” said Chirstian Kaeser, global head of tax at Siemens and chair of the ICC Commission on Taxation. “These taxes increase the risk of double taxation and thereby negatively impact investment and growth at a time when economic recovery is still fragile,”

The revised policy statement acknowledges recent developments, most notably the Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting Project (BEPS) initiated by the G20. USCIB plays a leading role in OECD global tax discussions and recently held its annual International Tax Conference on BEPS.

Read more on the ICC website

Staff contact: Carol Doran Klein

More on USCIB’s Taxation Committee

BIAC Consultation on the BEPS Action Plan

Published on September 9, 2013

On October 1, the Business and Industry Advisory Committee to the OECD (BIAC) will hold an international business consultation on the Base Erosion and Profit Sharing (BEPS) Action Plan together with governments and the OECD Secretariat at the OECD in Paris. The meeting agenda will cover the full BEPS Action Plan, with the aim to provide business input early in the BEPS process. BIAC has launched a BEPS web resource to provide full background information for this important project.

The OECD BEPS Action Plan was endorsed by G20 Finance Ministers on July 19, 2013 in Moscow and subsequently by the G20 governments in Saint Petersburg in September. The Action Plan sets out 15 areas of work to be undertaken across a range of tax issues, including the digital economy, transfer pricing, coherence of corporate income taxation, as well as transparency, certainty and predictability of taxation. The timeline for BEPS is ambitious, aiming for completion by December 2015, and will integrate a number of related on-going OECD projects on fundamental tax issues, among them the definition of permanent establishment, and the transfer pricing of intangibles.

This fall, the BIAC Tax Committee will continue to provide input to the OECD on the entire range of BEPS related issues. BIAC also continues its dialogue on tax with emerging economies, including China, India and Brazil. On October 7-8, BIAC, together with its Brazilian Observer CNI, the National Confederation of Industry of Brazil, will hold a conference on Brazilian and International Tax Issues with the participation of business, the OECD and the Brazilian tax authorities.

Staff contact: Carol Doran Klein

More on USCIB’s Tax Committee

Tax Conference Weighs New Scrutiny of Global Companies

Published on June 21, 2013
4537_image002
IRS Deputy Commissioner Michael Danilack delivered keynote remarks at the conference.

Earlier this month, against a backdrop of slow economic growth and increased attention to international corporate tax practices, executives from a range of global companies met in Washington, D.C. with tax experts from the OECD and member governments at the 2013 OECD International Tax Conference. Now in its eighth year, the sold-out event was organized by USCIB in cooperation with the 34-nation OECD, which is the leading global forum for discussion of international tax policies.

The June 3-4 conference focused on the challenge of adapting longstanding international tax principles to the modern economy. At their summit in Mexico last year, G20 leaders explicitly referred to “the need to prevent base erosion and profit shifting,” or BEPS. G20 finance ministers subsequently asked the OECD to report on this issue by their meeting last February. The OECD report and follow-on action were high on the agenda at this year’s conference.

Pascal Saint-Amans, director of OECD Center for Tax Policy and Administration, led a discussion BEPS.  Participants included Robert Stack, deputy assistant secretary for international tax affairs at the U.S. Treasury; Mike William, director of business and international taxation with Her Majesty’s Treasury in the U.K.; Brian Ernewein, general director of tax policy with Finance Canada; and Will Morris, chair of the BIAC committee on Taxation and Fiscal Affairs.

The panelists acknowledged that there are problems with present system, but they cautioned that current rules have worked well for decades, and adverse impacts must be carefully considered. Stack said that “respecting legal entities and contracts is critical to the functioning of the transfer pricing rules, which have worked reasonably well in a very large majority of situations.”

Michael Danilack, deputy commissioner at the Internal Revenue Service, provided keynote remarks on recent developments in the OECD’s Forum on Tax Administration, which promotes dialogue between tax administrations and identifies good tax administration practices. Click here to read his remarks.

Several panels addressed issues relating to transfer pricing, including a panel led by Joe Andrus, head of the OECD’s transfer pricing unit. Business is very concerned about proposed changes to the OECD’s transfer pricing guidelines on intangibles. The issue of entitlement to intangible-related returns is particularly difficult, especially the notion of financial investment.

Andrus said the OECD believes that financial investment in intangibles is important, and continues to wrestle with this issue. He also indicated that financial investment will be dealt with differently in the next version of the discussion draft.

The conference was co-organized by USCIB, the OECD and the Business and Industry Advisory Committee (BIAC) to the OECD, which officially represents the view of industry in the Paris-based body, and for which USCIB serves as the U.S. member federation. Supporting organizations include the International Fiscal Association, Tax Foundation, National Foreign Trade Council, Organization for International Investment, Tax Council Policy Institute, International Tax Policy Forum and Tax Executives Institute.

“Governments need clear, consistent rules to collect an appropriate amount of tax from multinational enterprises doing business in their jurisdictions,” said Carol Doran Klein, USCIB’s vice president for tax policy. “Businesses need clear and consistent rules to foster trade and investment across borders.  Developing these rules requires dialogue among countries and business. The conference was an important part of that dialogue.”

Staff contact: Carol Doran Klein

Photos from the conference on Facebook

More on USCIB’s Taxation Committee