The 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:
- 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.
- 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.
- 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.
Staff contact: Carol Doran Klein