BIAC Archives

Business Highlights Opportunities to Strengthen Paris Agreement

Published on September 16, 2016

ParisWorkshopLast week, business, government, OECD and UNFCCC representatives attended a first of its kind workshop at the OECD to share experiences and explore next steps to enhance the role of business in the preparation, review and improvement of national pledges for the Paris Agreement.  Organized by BIAC and the Major Economies Business Forum (BizMEF),  the workshop included presentations of pro-active business dialogue and cooperation with national and regional governments from representatives of BusinessEurope, CNI, Keidanren, and MEDEF.

Opening the meeting, Russel Mills, Dow Chemical, Chairman of BIAC’s Environment and Energy Committee, stated that “in today’s increasingly inter-linked economies more in-depth cooperation between governments and business is essential to build the best models to most effectively tackle our major climate change challenges.” Over the course of the workshop, representatives of the UNFCCC and its Paris Agreement and implementation bodies presented their perspectives on where business could support action and inform technical discussions leading up to entry into force of the Paris Agreement and the development of rules for tracking progress of national actions.

Norine Kennedy, USCIB, presented a discussion paper, Business Engagement in Domestic and International Implementation of the Paris Agreement: Institutional Infrastructure for Nationally Determined Contributions (NDCs) and the UN FrameworkConvention on Climate Change (UNFCCC) , prepared by USCIB for BizMEF.  The discussion paper offers case studies drawn from a BizMEF survey of its partner organizations and recommends a recognized business interface to be developed as part of the Paris Agreement institutional infrastructure.  This unique report offered to UNFCCC by leading national and regional representative business groups will be further elaborated and presented in final form at a BizMEF side event during the next climate meetings in Marrakesh in November.

BIAC representatives also attended the OECD Global Forum on Climate Change this week.  BIAC’s ongoing policy work to advise OECD member states highlights the necessity of innovative technologies and investments that will support and scale up mitigation, adaptation and resilience.  In his closing comments, Mills reminded the Workshop that when “business identifies the most cost effective options for climate policy, this helps governments and society tackle climate challenges faster and cheaper.”

To read the current discussion draft, click here. We will keep you informed of further developments.

Taking Stock of Business Conduct

Published on July 28, 2016

The OECD Guidelines for Multinational Enterprises are the most comprehensive international instrument for responsible business conduct and are supported by a unique implementation mechanism of National Contact Points (NCPs) established by adhering governments.

NCPs have been part of the MNE Guidelines since 1984. However it was the 2000 review that gave them a stronger role to deal with all matters relating to the Guidelines, including resolving issues related to non-observance. Since then, the number of complaints against companies has been on the rise.

To take stock of the experience over the last 15 years, the OECD has conducted an analysis of the functioning and performance of the NCP mechanism. The full report was published at the end of June on the occasion of the 40th anniversary of the MNE Guidelines.

The Sustainable Development Goals as Business Opportunities

Published on July 21, 2016

SustainabilityThe scale and ambition of the United Nations Sustainable Development Goals (SDGs) create a tremendous opportunity for the private sector to demonstrate the central role it plays in human prosperity. Business will serve as an essential partner to meet the challenge of achieving the SDGs.

The recently unveiled OECD Development Co-operation Report 2016: The Sustainable Development Goals as Business Opportunities, acknowledges the private sector’s role as a “powerful promoter of sustainable development”. It also highlights the opportunity for the governments to leverage private sector contribution, helping to manage risk and providing insights into effective policy and practice. The publication lists the enabling factors, as well as the constraints, for businesses and investors interested in addressing sustainable development challenges.

The report also provides guidance on responsible business conduct and outlines the challenges in mobilizing and measuring private finance to achieve the SDGs. Throughout the report, practical examples illustrate how business is already promoting sustainable development and inclusive growth in developing countries. USCIB and its global network contributed to the report:

  • Shaun Donnelly, USCIB’s vice president for investment and financial services, contributed an article titled “Pro-Investment policies really matter!” about the link between good investment policies and development (p. 61 in the report).
  • Louise Kantrow, the International Chamber of Commerce’s permanent representative to the United Nations, highlighted the shared interests between the business community and the development community in her piece, “Sustainable development challenges are business challenges.” (p. 28 in the report)
  • And during the report’s launch event, USCIB Vice President for Labor Affairs, Corporate Responsibility and Governance Ariel Meyerstein showcased the influential Business for 2030 website, an initiative by USCIB highlighting the contributions from the private sector in helping to achieve the SDGs.

More details, including ways to access the report can be found on the OECD Website.

IOE at Labor Ministerial: Implement G20 Commitments

Published on July 18, 2016
L-R: U.S. Labor Secretary Thomas Perez and Ronnie Goldberg (USCIB) in Beijing
L-R: U.S. Labor Secretary Thomas Perez and Ronnie Goldberg (USCIB) in Beijing

IOE Vice President Mthunzi Mdwaba stressed the need for programs and reforms to encourage entrepreneurship and innovation at the G20 Labor Ministerial in Beijing. In He made several statements in support of implementation of G20 commitments.

“Promoting and enabling entrepreneurship and innovation will contribute to more dynamic labor markets, which concomitantly will lead to the generation of more jobs and which will of course enable people to reach their full potential by opening their own businesses, instead of just being employed,” he said. “We would like to urge for a special focus to be given to youth entrepreneurship. Young entrepreneurs not only bring vibrancy and innovation to world economies, they also typically hire other youth. This is particularly important in view of the youth unemployment challenge we all want to tackle.”

Ronnie Goldberg, USCIB senior counsel, attended the ministerial in her capacity as chair of the Business and Industry Advisory Committee (BIAC) to the OECD Employment Labor and Social Affairs Committee. At the ministerial Goldberg pressed for continued joint leadership by BIAC and the International Organization of Employers (IOE) in ongoing negotiations with the Labor-20.

Mdwaba applauded the G20 entrepreneurship initiative that has been adopted and emphasized the need for an enabling environment for business, to raise the status of apprenticeships and to reduce in non-wage labor costs as measures to ensure the G20 employment process is a success.

IOE Meets with G20 Labor Ministers

The International Organization of Employers (IOE) jointly with the Business and Industry Advisory Committee (BIAC) to the OECD, Deloitte, the International Trade Union Confederation (ITUC) and the Trade Union Advisory Committee (TUAC) to the OECD hosted an informal gathering with G20 governments, employers and trade unions in Beijing as part of the G20 process.

IOE-BIAC survey to monitor implementation of G20 commitments

The event provided the opportunity to highlight the outcomes of the IOE-BIAC’s efforts to monitor implementation of G20 commitments. The results are mixed, showing that on one hand most governments followed up on the Melbourne and Ankara G20 Labor Ministers’ Declarations and have developed initiatives to implement the commitments, but on the other hand, in areas such as reduction of non-wage labor costs, the situation has worsened in a number of countries.

The level of ownership of the national employment plans among employers’ organisations was also put into question. The majority of employers’ federations in G20 countries show little confidence in the impact of the G20 process on producing major policy changes at the national level. All in all, while follow-up at the national level to G20 commitments is seen to be taking place, it is perceived as being insufficient in addressing the main employment challenges at hand.

Joint IOE-BIAC/ITUC-TUAC statement on “innovation, growth, jobs and decent work”

The informal gathering also served as a platform to launch the IOE-BIAC/ITUC-TUAC joint statement to the G20 Labor Ministerial. The statement refers to the joint B20-L20 messages of 2015 because of the “failure of many G20 economies to recover from recession and the elusive nature of global growth”.

The joint statement provides recommendations in six main areas:

  1. develop a policy framework for better technology diffusion
  2. determinedly tackle youth unemployment
  3. pursue macro-economic policies that promote employment
  4. make a reality of the 2014 Brisbane target of reducing by 25 percent the gender gap in employment by 2025
  5. promote formality and implement the recommendation on informality adopted by the 2015 International Labor Conference
  6. business and labor play a key role in the shaping of economic and social policy

Roundtable on Business Engagement in the Paris Climate Agreement and INDCs

Published on July 1, 2016

forest_greenThe Business and Industry Advisory Committee (BIAC) to the OECD welcomed the successful conclusion of COP 21 in Paris last December and underlined the importance of active business involvement in the implementation of the agreement. On September 12, the Major Economies Business Forum (BizMEF) in cooperation with BIAC will organize a roundtable on Business Engagement in Intended Nationally Determined Contributions (INDCs), or country pledges, and the Paris Agreement, back-to-back with the bi-annual OECD/IEA Climate Change Expert Group Meeting in Paris.

Over the past year, major business organizations have shared their experiences consulting with national governments in the preparation of initial INDCs and contributed to a survey prepared by USCIB. Participants from business, governments, academia and international institutions will discuss results and lessons learned as well as ways that business can contribute to the new five-year cycles of domestic and international processes to take stock of global implications and to renew and review INDCs. Discussions will benefit from the unique insights business has into the implications of the portfolio of INDCs for their operations, and investments, and for supply and value chains in the globalized economy.

Business Sets Priorities for Education Policy

Published on June 28, 2016

In response to the skills shortages many economies face, the Business and Industry Advisory Committee (BIAC) to the OECD released a “Business Priorities for Education” paper that calls for stronger cooperation among employers, policymakers, and education institutions.

“Our societies, and employers in particular, have a profound interest in ensuring that today’s and tomorrow’s job seekers are versatile, skilled, and employable,” commented Charles Fadel, Chair of the BIAC Education Committee. “They must be prepared to learn throughout their professional lives.”

Businesses therefore pay close attention to education policy. The competitiveness of companies, and the health of the societies in which they operate, hinge to a great extent on the talent and knowledge of employees.

The BIAC paper contributes chapters by thought leaders from national employer organizations and other education policy experts. Areas for action as identified in the paper include:

  • Curriculum and assessment reform
  • Entrepreneurial education
  • Teaching quality and school autonomy
  • Vocational education and training, and work-based learning
  • Innovation in education and higher education

Read Business Priorities for Education

Strong Business Engagement at OECD Internet Ministerial

Published on June 24, 2016
Hackathon2
L-R: Angel Gurría (OECD), Ildefonso Guajardo Villarreal (Mexican government) and Peter Robinson (USCIB)

Information flows across borders at an unprecedented pace. Few aspects of our lives remain untouched by the digital economy, and new challenges have arisen in this context. Meeting these challenges requires all stakeholders to develop new digital economy policies. From June 21 to 23, OECD ministers and stakeholders gathered in Cancún, Mexico, for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity to move the digital agenda forward in four key policy areas considered foundational to the growth of the digital economy — Internet openness; trust in the digital economy; building global connectivity; and the transformation of jobs and skills.

Toward this end, participants issued the Cancún Ministerial Declaration on the Digital Economy. Among other elements, the Declaration recognizes that the OECD’s Internet Policy Principles (IPPs), Consumer Protection in E-commerce, Digital Security Risk Management for Economic and Social Prosperity, Cryptography Policy and Protection of Privacy and Transborder Flows of Personal Data, serve as an invaluable suite of frameworks to further guide the development of coherent policies for an increasingly digitalized economy.

The Declaration then sets forth nine key commitments, which include, first and foremost, supporting the free flow of information. Other commitments emphasize the importance of stimulating digital innovation and creativity, increasing broadband connectivity, embracing the opportunities arising from emerging technologies such as the Internet of Things and cloud computing, and promoting digital security risk management and the protection of privacy at the highest level of leadership, among other priorities.

Although the Ministerial examined four key policy areas, the issue of restoring user trust in the online environment emerged as a recurring theme across all sessions. During the June 22 opening plenary, U.S. Secretary of Commerce Penny Pritzker acknowledged that while digital technologies have become a driving force of job creation, entrepreneurship, and innovation in the 21st century, they also bring new challenges related to cybersecurity and privacy. She urged that countries continue to rely upon the OECD’s IPPs for guidance and avoid “throwing up digital walls” through data localization and other policies and regulations that block legitimate cross-border data flows.

“We expect such policies from authoritarian regimes that want to isolate their people – not from nations that welcome the global exchange of ideas and commerce,” Pritzker said.

During the June 23 closing ceremony, OECD Secretary General Angel Gurria described the Ministerial Declaration as providing a forward-looking roadmap for how the digital economy can improve our lives. During the next two years, the OECD will examine in consultation with all stakeholders the “homework” that must be undertaken to prepare for the next phases of digitalization. This will include addressing the “deficit of data” needed to effectively measure the digital economy. Gurria underscored the importance of leadership from the top.

“We all leave Mexico with clear marching orders of policies to promote in our countries [which will mean] rethinking our policies from tax, to trade, to transportation through a digital lens,” Gurria said.

Business Stakeholder Day

During the Ministerial, the Business and Industry Advisory Committee (BIAC) to the OECD, together with the Mexican business federation COPARMEX, hosted a Business Stakeholder day dedicated to Unleashing the Benefits of Innovation in the Global Information Society. Close to 30 speakers and 300 business and government delegates were in attendance.

In his opening remarks, BIAC Secretary General Bernhard Welschke called for comprehensive measures to foster the growth potential of the digital economy. “Innovation is the key driver of growth for our economies and societies,” Welschke said. Ambassador Pérez-Jácome, the Mexican Ambassador from the permanent delegation of Mexico to the OECD, emphasized that “creating the conditions to foster innovation, investment and labor mobility is crucial to grasp the benefits of the digital economy.” BIAC’s Mexican Vice Chair José Ignacio Mariscal Torroella, also pointed to the importance of the digital economy for the growth potential and role of Mexico in the global economy.

Business participants from a variety of sectors and countries explored framework conditions that create the optimum enabling environment for success in the digital economy and information society: Infrastructure, Innovation, Information flows, Intellectual capital, Investment and Integration. They also drilled down into the innovation element, examining adequate policy conditions to ensure that the innovation capacity, creativity and fruitful ideas can be transformed into useful services and products.

Both USCIB President Peter Robinson and Senior Counsel Ronnie Goldberg moderated panels, on “Framework Conditions for Success in the Digital Economy” and “Workforce Development and Mobility,” respectively, as did USCIB members Peter Davidson, SVP of Verizon, on “Enabling the Benefits of Innovation” and Dorothy Attwood, SVP of Walt Disney, on “Promoting Trade, Inclusion, and Trust”.

“A clear takeaway was that a balanced policy framework that encourages creativity and innovation, and fosters trust, is necessary to realize the benefits of the digital economy,” Robinson said. “And OECD plays an important role in offering tools and policies to guide governments forward.”

In addition, business stakeholders offered their own views on fostering consumer trust in the online environment through policies aimed at optimizing the benefits of data flows while recognizing security and privacy concerns.  Mirroring the Ministerial’s focus on job transformation in the digital economy, speakers provided the business perspective on the challenges of developing and maintaining workforce skills in an ever-evolving global digital economy.

Hackathon Contest

In parallel to the stakeholder conference, the business community in partnership with the OECD and the Government of Mexico developed a 24-hour Hackathon – an app developer contest – that attracted nearly 200 participants between the ages of 18 to 29 from both OECD and non-OECD member countries, who competed in 37 teams of 3-6 people.

The Hackathon, working under the theme “Connected Communities, Connected Lives” provided an opportunity for Ministers and stakeholders to observe the creative process of youth as they cultivated their digital skills and developed apps to address a particular local or global challenge.

Developers competed to win over $20,000 in cash awards, mentorship opportunities and other prizes, for apps targeted towards the categories of Cultural Heritage; Smart Cities; Social Inclusion; and, Entrepreneurship.

This has been an exciting example of public-private collaboration here at the 2016 Digital Economy Ministerial,” said USCIB President and CEO Peter Robinson at a special awards presentation for the Hackathon winning teams on June 22. “This contest demonstrated that the potential for innovative talent knows no boundaries.

The grand prize went to the team Nisi Vitae, who created an application that enables a user to quickly and automatically provide all medical information to emergency response personnel when calling for an ambulance. Nisi Vitae also won the Smart City award.

Other category prize winners included Time Stamps in the Cultural Heritage category, who created an app designed to make studying history more immersive for teenagers; VR-ehab in the Social Inclusion category, who created an app that converts physical rehabilitation into a game using an Android Virtual Reality environment and a hand movement detection system; and Autonomi in the Entrepreneurship category, who created an app aimed at increasing security and independence for the visually impaired.

The Hackathon was made possible by the generous support of the following sponsors: AT&T, Cisco, Disney, Google, Intel, Microsoft, Oracle, Verisign, and the Internet Technical Advisory Committee to the OECD (ITAC).

10 Business Recommendations for Productivity, Prosperity, and Inclusive Growth

“A balanced and comprehensive policy approach is necessary to reap the benefits of the digital economy”, said Welschke at the opening of OECD Ministerial meeting on the Digital Economy in Cancun on June 22. “It is crucial to set the right policy context if we want to leverage the full potential of innovation in globalized and increasingly information-oriented economies, to promote trade, inclusion and trust.”

BIAC participants from a variety of sectors pointed to innovative business models and applications, emerging technologies on cloud computing, Big Data, and the Internet of Things as areas with significant potential for economic growth and social benefit.

BIAC’s business messages and recommendations to the minsters call for policies that are grounded in the OECD’s Internet Policy Principles. Specifically, business advocates policies that: serve to foster business innovation; provide for open, fair and competitive markets; respect intellectual property rights, and effective systems to enforce those rights; encourage the adoption of emerging ICTs; raise awareness of digital privacy and digital security risk and develop tools and practices to manage those risks; and avoid unduly restricting the movement of data between companies on the domestic level and across borders. Skills development also is key for the mobility of workers, their competence and their resilience to labor market change.

BIAC Hackathon Showcases Talents of Global Tech Community

Published on June 23, 2016
Angel Gurria (OECD) and Peter Robinson (USCIB) present the Hackathon award to the grand prize winner, Nisi Vitae
Angel Gurria (OECD) and Peter Robinson (USCIB) present the Hackathon award to the grand prize winner, Nisi Vitae

As the OECD Digital Economy Ministerial brought together stakeholders this week in Cancun, Mexico to discuss the ways in which the digital economy has enabled global innovation, growth and social prosperity, the Business and Industry Advisory Committee (BIAC) to the OECD in cooperation with the Mexican government and the OECD organized a coding contest, known as a Hackathon, to demonstrate the power of digital innovation.

On June 20-21, teams of coders gathered in Cancun to compete for several awards and cash prizes by developing apps within the following categories: cultural heritage, smart city, social inclusion and entrepreneurship. The winning team was announced at the OECD Ministerial dinner whose speakers included OECD Secretary General Angel Gurría. USCIB President and CEO Peter Robinson and Mexican Secretary of the Economy Ildefonso Guajardo Villarreal.

“This has been an exciting example of public-private collaboration here at the 2016 Digital Economy Ministerial,” Robinson said as he introduced the Hackathon category winners at the Ministerial gala. “This contest for young coders and app developers attracted nearly 200 participants from both OECD and non-OECD Member countries – demonstrating that the potential for innovative talent knows no boundaries.”

Robinson, Gurria and Guajardo then presented the Hackathon category and grand prize winners:

Smart City Category Winner – Nisi Vitae
They developed an app that enables a user to automatically provide all of their medical information to emergency response personnel when calling for an ambulance.

Entrepreneurship Category Winner – Autonomi
This team developed an app that is aimed at increasing security and independence for the visually impaired.

Cultural Heritage Category Winner – Time Stamps
Their app makes studying history more immersive for teenagers.

Social Inclusion Category Winner – VR-ehab
They developed an app that converts physical rehabilitation into a game using an Android Virtual Reality environment and a hand movement detection system.

Grand Prize Winner – Nisi Vitae

As the U.S. affiliate of BIAC, USCIB has played an active role in planning the Hackathon. The Hackathon was also made possible by the following USCIB member sponsors: AT&T, Cisco, Disney, Google, Intel, Oracle, Microsoft and Verisign.

BIAC: Strengthen SME Financing and Global Growth

Published on June 22, 2016

Money_globeIn response to the current low growth trap facing many economies, the newly released publication, “Financing Growth; SMEs in Global Value Chains,” advocates G20 policy consistency for long-term financial stability, investment and economic growth. It shares perspectives from government, international organizations, business and academic thought leaders.

“For SMEs to participate in global value chains and underpin economic recovery, urgent actions are needed at G20 level to better coordinate financial regulations, strengthen access to financing and training and support the sharing of information through digital platforms,” said Bernhard Welschke, BIAC secretary general, commenting ahead of the G20 Finance Ministers and Central Bank Governors meeting in July in Chengdu.

The publication builds on a Roundtable event held on May 31 in Paris, co-organized by BIAC, B20 China, OECD, World SME Forum and SME Finance Forum.

The publication Financing Growth; SMEs in Global Value Chains is available online here: http://biac.org/wp-content/uploads/2016/06/Financing-Growth-SMEs-in-Global-Value-Chains.pdf

For further details about the Roundtable held on May 31, please see a video summary here: https://youtu.be/nVbwdLuoEMU and webpage here: http://biac.org/?p=13715

USCIB Tax Conference Tackles BEPS Implementation

Published on June 8, 2016
IRS Commissioner John Koskinen
IRS Commissioner John Koskinen

Hundreds of policymakers, business executives, OECD officials and tax professionals gathered at the Four Seasons Hotel in Washington, D.C. on June 6 and 7 for USCIB’s flagship OECD International Tax Conference. Every year the conference draws global companies and those involved in crafting international tax policies, with this year’s discussion focusing on the global effort to implement the OECD’s controversial Base Erosion and Profit Shifting (BEPS) project. After three years of negotiations, BEPS concluded last year with governments developing a framework for modernizing international tax rules. Countries will now turn toward the challenging task of implementing the BEPS recommendations.

Organized by USCIB, the OECD and the Business and Industry Advisory Committee (BIAC) to the OECD, the annual tax conference gives members of the tax community a timely opportunity to discuss the OECD’s international tax initiatives and their impact on global trade and investment. Keynote remarks were delivered by U.S. Internal Revenue Service Commissioner John Koskinen, who provided the U.S. perspective on global tax cooperation.

The conference kicked off with opening remarks by Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, who told the audience we are living in an inclusive “post-BEPS world” in which all countries are invited to participate on equal footing in implementing the new tax rules. He explained that the world needs tax policies that lead to inclusive growth, which will in turn create tax certainty.

“Ahead of us we have a more relaxed debate,” Saint-Amans said. “BEPS is going to be implemented, but we can do it in a balanced manner with a forward-looking agenda geared toward inclusive growth.”

US perspective on global tax cooperation

During the keynote address, Koskinen attributed the breakneck changes that have occurred in global tax policy to the “willingness of governments everywhere to come together and work collaboratively on common goals.” He supported the goal of the BEPS project to eliminate incidences of tax avoidance, and also reiterated that actions taken to improve tax compliance must not impede global commerce. As such, he said clear and consistent tax laws and regulations are necessary.

From the perspective of a tax administration, Koskinen explained that addressing base erosion requires an efficient and secure automatic exchange of information as well as effective measures to resolve disputes related to tax treaties in a timely manner. He noted that the OECD’s common reporting standard is based on the U.S. Foreign Account Tax Compliance Act (FATCA), which requires foreign financial institutions to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. He said America’s experience with FATCA can help inform the OECD’s common reporting standard, and that the challenge for tax administrations is to obtain and exchange tax information in a secure manner and to only use that data for tax purposes.

There is much the United States can contribute to the common reporting standard (CSR), but Congress has yet to pass legislation allowing the U.S. to sign on to the CRS. He called on Congress to act.

“U.S. participation in this standard is critical to ensuring that reporting is as straightforward and as seamless as possible for financial institutions and companies in the U.S.,” He said. “Therefore, I will continue to urge Congress to enact this legislation as quickly as possible.”

On country-by-country reporting, Koskinen said that the United States has been receptive to the business community’s concerns. The country-by-country reporting system went into effect on January 1, 2016, but the U.S. regulations designed to comply with this system will only apply to tax years beginning on or after July1, 2016, meaning that under the OECD’s requirements the first reports will be due several months before they will be due under U.S. regulations.

“I want to assure everyone that we understand the concerns expressed by the business community about the difficulties that this gap period poses for U.S.-based companies,” he said. “We are considering alternative methods for receiving submissions for the gap period, which could include some system of voluntary reporting. We are coordinating with other countries to try and make sure that voluntary filing will work.”

He concluded that although there is much work left to be done, the high level of political support for addressing BEPS is heartening.

“Given the spirit of cooperation and collaboration that exists among governments in this effort, I remain confident that we will achieve our goals,” he said.

Read commissioner Koskinen’s remarks

How can global tax policy spur international investment and trade?

Dealing with tax uncertainty was a recurring theme throughout the conference. The goal of the BEPS project is to coordinate national tax rules to avoid harmful tax practices, thereby removing uncertainty and spurring international investment and trade, which lies at the core of the OECD’s tax work.

L-R: Pascal Saint-Amans (OECD), Robert Stack (U.S. Treasury), Marty Sullivan (Tax Analysts), Will Morris (BIAC), Pam Olson (PwC)
L-R: Pascal Saint-Amans (OECD), Robert Stack (U.S. Treasury), Marty Sullivan (Tax Analysts), Will Morris (BIAC), Pam Olson (PwC)

Panelists discussed which policies countries should adopt to help reduce tax uncertainty. Will Morris, chairman of the BIAC Committee on Taxation and Fiscal Affairs, shared the findings of a survey aimed at defining tax uncertainty. The survey revealed that the top five tax uncertainty factors for businesses are unpredictable or inconsistent treatment by a tax authority, retroactive changes to legislation, frequent changes to the statutory tax system, complexity of the tax code and a poor understanding of the tax code by tax authority. Morris explained that these factors have a serious negative impact on a business’s decision to invest. Faster audits and the timely resolution of cross-border disputes were suggested as ways to increase certainty.

To deal with tax uncertainty, speakers agreed that businesses need to make the case for the importance of foreign direct investment (FDI) and its connection to broader tax issues, so that governments understand they must do more to attract FDI.

“Business doesn’t exist for the purpose of paying taxes,” said Pam Olson, U.S. Deputy Tax Leader & Washington National Tax Services Leader at PricewaterhouseCoopers. In the long term, tax policies that encourage businesses to invest rather than simply seize revenue will be better for inclusive growth.

Panelists also highlighted the importance of building trust. Olson noted that there needs to be more dialogue between businesses and governments on taxation, which would go a long way towards increasing tax certainty. Robert Stack, deputy assistant secretary for International Tax Affairs at the U.S. Treasury, agreed and said that “trust among governments is critical” as well. There is a danger that some countries will take the OECD’s BEPS recommendations as a baseline for their tax laws and then go above and beyond the recommendations. Stack said that such behavior would undermine global trust in the BEPS project.

Inclusive implementation 

Over the course of the BEPS project, the OECD has been incrementally increasing input from developing countries. BEPS implementation provides an opportunity to secure political support in developing countries to increase their tax administration resources. To help developing countries take a more active role in BEPS work, the OECD has developed toolkits and an initiative with the United Nations called Tax Inspectors Without Borders.

James Karanja, head of the Tax Inspectors Without Borders initiative, explained the goals of his project: transfer tax audit knowledge and skills to tax administrations through a “learning by doing” approach; deploy experts to work directly with local tax officials in current audits; ensure greater consistency in application of rules creating greater certainty for taxpayers; and increase revenues.

Stack noted that policymakers need to think outside the box when applying the BEPS action plan to developing countries, and all speakers agreed that everybody benefits when developing countries enjoy a sustainable tax base, effective tax administrations and rule of law.

During the second day of the conference, participants explored in detail several outstanding items and unfinished initiatives that need to be addressed in order for BEPS implementation to proceed, including permanent establishments, transfer pricing, interest deductibility and the OECD’s effort to create a multilateral instrument to enable countries to swiftly amend their bilateral tax treaties to implement treaty-related BEPS recommendations.

Read the full program