Taxation Archives

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

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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

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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

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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

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Governments Practitioners and Business Review OECD G20 Push to Rewrite Global Tax Rules

Published on June 4, 2014
IRS Commissioner John Koskinen addressing the conference
IRS Commissioner John Koskinen addressing the conference

Washington, D.C., June 4, 2014 – With governments from the G20 and other advanced economies moving forward in an effort to rewrite global corporate tax rules, officials from the Organization for Economic Cooperation and Development (OECD) joined national policy makers, business executives and other tax experts to review progress and plot a realistic path  forward.

The 2014 OECD International Tax Conference, which wrapped up yesterday in Washington, D.C., provided timely insight into the OECD’s work on “base erosion and profit shifting” (BEPS), under which governments are seeking to curtail what they perceive as growing under-taxation or non-taxation of international corporate income.

The two-day conference was organized by the United States Council for International Business (USCIB) in cooperation with 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. It was the ninth in an increasingly popular annual series of such events held in Washington, D.C. Details are available at www.uscibtax.org.

A year after G20 leaders endorsed a 15-point action plan put forward by the OECD to draw up new global tax rules to counter base erosion and profit shifting, the first group of projects is heading towards completion. This includes work on intangibles, country-by-country reporting, tax treaty abuse, hybrids and the digital economy. The conference provided an opportunity to assess progress to date and look forward to the work that will occupy the OECD over the next year.

Pascal Saint-Amans, director of the OECD Center for Tax Policy and Administration, said that OECD was consulting closely and extensively with all countries and stakeholders involved in order to reduce uncertainties. “With the OECD’s member countries, G20 countries and stakeholders, we share the goal of limiting uncertainty in tax systems,” he said. “In the long run, the best way to make sure that global businesses can operate smoothly, taxed appropriately and not more than once, is for countries to work together rather than take uncoordinated, unilateral actions. That’s what we’re working at the OECD to facilitate, and we are fortunate to have so many interested and invested partners as part of this conversation.”

According to Bill Sample, corporate vice president for worldwide taxes with Microsoft and chair of USCIB’s Taxation Committee, the conference underscored the importance and complexity of the debate around BEPS and global tax policies, and the OECD’s centrality in it. “The OECD process gathers the most important government officials, and benefits from strong business participation,” he said. “While there have been differences of opinion, it is clear that the OECD offers the best forum for such discussions.”

Will Morris, director of global tax policy with GE International and chair of the BIAC Committee on Taxation and Fiscal Affairs, said: “There is a danger to the OECD’s central mission of promoting cross-border trade and investment if the focus of the BEPS project becomes solely about anti-abuse, rather than about improving the international tax system. Furthermore, unilateral action by states is a real risk. It’s in the interest of business to have as broad an agreement as possible, for the sake of certainty.”

Carol Doran Klein, USCIB’s vice president and international tax counsel, who serves as vice chair of the BIAC Tax Committee, said tight deadlines had made input difficult. “Events like this provide a good opportunity for OECD governments and secretariat officials to hear from the business community,” she said. “And we need to ensure that the private sector can contribute meaningfully to the detailed technical work being done across a range of areas.”

IRS Commissioner John Koskinen, the conference keynote speaker, focused his remarks on evolving cross-border regulatory compliance under the U.S. Foreign Account Tax Compliance Act (FATCA). “Although the policy issues have been settled and tax transparency is the common goal, tax administrators still must answer the question of how we make automated information work well as a practical matter,” he said.

On BEPS, Koskinen warned against the development of an overly complex country-by-country reporting system. “My hope would be that policy and legal determinations not be made without thoroughly considering the practical implications of these decisions, not only for businesses, but for tax administrations,” he stated.

Other speaker at this year’s conference included:

  • Mike Williams of Her Majesty’s Treasury in the UK, vice chair of the OECD Committee on Fiscal Affairs
  • Tizhong Liao, China’s director general of international taxation
  • Robert Stack, deputy assistant secretary for international tax affairs, U.S. Treasury
  • Eduoard Marcus, deputy director of international and European affairs, French Ministry of Finance
  • Martin Kreienbaum, director general of international taxation, German finance ministry
  • Armando Lara Yaffar, director general, Mexican finance ministry.

They were joined by other OECD experts on transfer pricing, international tax cooperation and related matters, tax officials from the U.S. and other OECD governments, and business experts from USCIB and BIAC’s global membership.

About USCIB:

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

Contact:
Jonathan Huneke, VP communications, USCIB
+1 212.703.5043 or jhuneke@uscib.org

Conference agenda and other information

View conference photos (flickr)

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From the President: What’s the Rush on Global Tax Reform?

Published on June 1, 2014

In their haste to tackle “base erosion and profit shifting,” governments risk fostering the kind of unilateral action they are seeking to avoid.

peter-robinsonLast year, responding to concerns that multinational firms take advantage of gaps in the global taxation system to move income to lower-tax jurisdictions, the leaders of the G20 endorsed a plan put forward by the Organization for Economic Cooperation and Development (OECD) to counter what governments called “base erosion and profit shifting,” or BEPS.

This acronym has quickly risen to the top of many CEOs’ “worry list,” and made the annual tax conference we organized with the OECD in June (see story on page 3) even more popular than usual this year. But what’s behind the sudden rush to action in an area as contentious and fraught with complexity as global tax policy? And what might happen if governments get it wrong?

What constitutes “tax abuse”?

Tax is not a moral issue. Indeed, the OECD and others have said repeatedly that tax planning – including planning that results in base erosion and profit shifting – is entirely legal. Companies do not abuse the system by taking advantage of legal methods of reducing their taxes. Corporate tax reduction strategies have, however, caught the attention of politicians (and the public) at least in part because of the financial crisis and the resulting fiscal consolidation. There is – and should be – a policy debate about the appropriate level of corporate income taxes.

Each country has a sovereign right to make decisions about the amount of revenue it collects, and from whom. Indeed, the ability to make decisions about taxing and spending is a core element of statehood, and a country cannot give up that ability without surrendering its sovereignty. So, taxing rights are jealously guarded by countries. What then is the function of the OECD or any other multilateral organization in this core function?

In order to promote international trade and investment, countries need agreed-upon rules of the road to determine which country has taxing rights to how much income when goods or services cross borders. If there is no agreement, then uncertainty and double taxation will reduce trade and investment. The BEPS project arose out of concern that the rules for eliminating double taxation have gone too far and the pendulum needs to swing at least part of the way back.

It is important, however, to maintain sound principles for determining when a foreign company is subject to tax within a jurisdiction and how much of its income is subject to tax. Although the existing principles do not work perfectly, they have facilitated the development of cross-border trade and investment, and should not be abandoned lightly or in the absence of a new consensus. Any new consensus must be a true, detailed consensus where countries agree not just on a string of words, but on the meanings of those words.

Race to the finish line?

The first group of projects is now heading towards completion. These projects include work on intangibles as well as such seemingly esoteric topics as country-by-country reporting, tax treaty abuse, hybrids and the arm’s length principle. In today’s modern, highly integrated global economy, these issues are crucial for the operations of multinational companies and the administration of national tax systems.

While the OECD does not have legislative authority, there is substantial political will behind the BEPS project and wide support from the G20 countries, which are participating in the process on an equal footing with OECD member countries. But getting to a fair and reasoned outcome on a 24-month deadline is challenging, given the scale of its ambition and critical need for a consultative process with BIAC and other stakeholders to work toward consensus.

That’s why business must engage positively with the OECD, recognizing the public and political momentum behind change, and the continuing danger of unilateral action if the BEPS action plan falters. Moreover, there are many other pressing tax issues for U.S. legislators and policy makers. The challenge is to pursue these in concert with the reforms being undertaken via the BEPS process, with the goal of creating a simpler, fairer and more competitive tax system for everyone.

Peter Robinson’s bio and contact information

Other recent postings from Peter Robinson:

Setting the Rules of the Road in Cross-Border Commerce (Spring 2014)

It’s Time to Clap with Both Hands on FDI (Winter 2013-2014)

Making Sure the Business Voice Is Heard in International Agencies (Fall 2013)

A Trade Policy Renaissance (Summer 2013)

Tax Conference to Spotlight OECD/G20 Work on Base Erosion

Published on May 15, 2014

OECDTAXConferenceWashington, D.C., May 15, 2014 – As governments from OECD/G20 economies work to rewrite many of the fundamental rules of global corporate taxation, an upcoming conference will provide timely, essential insight for American companies into the process. On June 2-3 in Washington, D.C., the United States Council for International Business (USCIB) will hold its ninth annual global tax conference, in cooperation with the Organization for Economic Cooperation and Development (OECD) and the Business and Industry Advisory Committee (BIAC) to the OECD.

A year after G20 leaders endorsed a 15-point action plan put forward by the OECD to draw up new global tax rules to counter “base erosion and profit shifting,” or BEPS, the first group of projects is heading towards completion. This includes work on intangibles, country-by-country reporting, tax treaty abuse, hybrids and the digital economy. The conference will provide an opportunity to assess progress to date and look forward to the work that will occupy the OECD over the next year.

“BEPS is an enormous undertaking, with far-reaching implications for how companies do business and how countries collect tax across borders,” said Carol Doran Klein, USCIB’s vice president and international tax counsel. “It is crucial that governments, OECD officials and the private sector work together to develop rules that meet government revenue goals, but also provide business with the certainty needed to make cross-border investments confidently.”

The 2014 OECD International Tax Conference, which will take place at the Four Seasons Hotel, will provide a unique opportunity for business experts to interact directly with key leadership from the OECD’s Center for Tax Policy and Administration, as well as senior tax officials from the United States and other OECD countries.

Speakers at this year’s conference include:

  • Keynote speaker IRS Commissioner John Koskinen
  • Masatsugu Asakawa of the Japanese finance ministry, who chairs the OECD Committee on Fiscal Affairs
  • Pascal Saint-Amans, director of the OECD Center for Tax Policy and Administration
  • Tizhong Liao, China’s director general of international taxation
  • Robert Stack, deputy assistant secretary for international tax affairs, U.S. Treasury
  • Will Morris, director of global tax policy with GE International and chair of the BIAC Committee on Taxation and Fiscal Affairs

They will be joined by other OECD experts on transfer pricing, international tax cooperation and related matters, tax officials from the U.S. and other OECD governments, and business experts from USCIB and BIAC’s global membership.

“Given the complexity of the issues, their significant potential impact on the taxation of international business, and the rapid progress the OECD is making on BEPS and related matters, it is essential that U.S. and other global companies gain a full understanding of the issues now and make their views known,” said Bill Sample, corporate vice president for worldwide taxes with Microsoft and chair of USCIB’s Taxation Committee.

“The business community is providing important input to the BEPS process,” added GE’s Morris. “This conference will provide an opportunity for further dialogue between the public and the private sectors on important matters affecting public confidence, revenue generation and economic growth.”

USCIB President and CEO Peter Robinson said: “The OECD is a valuable forum for informed discussion and guidance on many facets of government policy and regulation, especially in taxation. We are delighted to continue our long tradition of working with the OECD and BIAC to showcase the OECD’s important work on global tax policies.”

Robinson noted that, this year, USCIB had also partnered with the OECD on a March 10 conference in Washington on information and communications technologies, and would organize a joint conference this October on new directions in trade and investment policy.

The 2014 OECD International Tax Conference is co-organized by USCIB, the OECD and BIAC, which officially represents the view of industry in the Paris-based body, and for which USCIB serves as the U.S. member federation. Details are available at www.uscibtax.org.

About USCIB:

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

 

Contact:

Jonathan Huneke, VP communications, USCIB

+1 212.703.5043 or jhuneke@uscib.org

 

Conference agenda and other information

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USCIBs Klein Named to International Tax Review’s Global Tax 50

Published on December 17, 2013
Carol Doran Klein
Carol Doran Klein

New York, N.Y., December 17, 2013 – USCIB’s Carol Doran Klein has been named one of International Tax Review‘s “Global Tax 50” for 2013, reflecting her own expertise and achievements as well as the business community’s close engagement with policy makers on international taxation.

In its profile of Klein, USCIB’s vice president for taxation, the influential publication said: “In a year that has seen large multilateral moves to tackle base erosion and profit shifting [BEPS], Klein has had her plate full in ensuring the concerns of U.S. business are heard. And with multiple action items on the OECD’s BEPS Action Plan scheduled for completion in 2014, her influence will continue to be critical if the views of U.S. business are to be heard in this international context.”

Now in its third year, the Global Tax 50 lists individuals and organizations who have had the greatest influence on tax policy, practice and administration in the last 12 months. Click here to read the entire listings on the International Tax Review website. Click here to read Klein’s profile and an interview.

“Hats off to Carol for this richly deserved honor,” exclaimed USCIB President and CEO Peter Robinson. “I am delighted that all her hard work in representing business views to the OECD, to the United Nations and to national governments – including our own – is being recognized. Carol has become an indispensible resource for the business community and is providing a strong, knowledgeable voice on global tax matters.”

Others included in this year’s Global Tax 50 include: Will Morris, global tax policy advisor with GE and chair of the Taxation Committee at BIAC, the Business and Industry Advisory Committee to the OECD (for which USCIB serves as the American affiliate); and Alan McLean, executive vice president for tax and corporate structure with Royal Dutch Shell, who is vice chair of the BIAC committee.

Each June, with BIAC and the OECD, USCIB holds an annual tax policy conference in Washington, D.C. This year’s conference is scheduled for June 2-3 at the Four Seasons Hotel. More information is available at www.uscibtax.org.

About USCIB:

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network encompassing leading international business organizations, including BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

Contact:

Jonathan Huneke, VP communications, USCIB
+1 212.703.5043 or jhuneke@uscib.org

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