The recent June 2017 OECD meeting on the Inclusive Framework on BEPS had a large turnout of participating countries, international organizations and other entities. It’s evident that this initiative has major acceptance by almost all jurisdictions. As the name implies, these bi-annual meetings primarily address subjects related to the OECD/G20 BEPS Project. However, they specifically focus on 4 particular items of the BEPS Action Plan:

Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance

Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances

Action 13: Transfer Pricing Documentation and Country-by-Country Reporting

Action 14: Making Dispute Resolution Mechanisms More Effective

The OECD established the Inclusive Framework on BEPS in January 2016 so that all interested countries and jurisdictions can work together towards implementation of the BEPS project. Over 100 countries and jurisdictions have joined, and are on an equal footing in developing standards on BEPS-related issues and reviewing and monitoring its consistent implementation. And if you participate in these meetings you can see that this is in fact the case. There is a voice for non-OECD members at this forum. These voices also have consequences, in as much as, their comments are taken into account and changes made to program initiatives when merited.

These meetings also offer the opportunity to learn details of particular BEPS Actions and erase misconceptions regarding certain topics. At the recent meeting, there were a number of topics presented with reference to the Inclusive Framework on BEPS minimum standards (Actions 5, 6, 13, and 14, referenced above), peer reviews, a Common Transmission System, how Country-by-Country Reporting can increase the effectiveness of a tax authorities risk assessment process and other relevant information.

While there are great benefits to attending these meetings, one major advantage is that you hear and learn what a particular Action item is or is not. With this, Action 14, Making Dispute Resolution Mechanisms More Effective, comes to mind. For a while it was rumored that in order to become part of the Inclusive Framework on BEPS, participants had to implement specific BEPS Action items. The “Buggy Man” was “binding arbitration.” In hindsight, I realize that in effect, that was “fake news.” I wonder who was spreading such fallacies? Well, this matter was discussed at the last Inclusive Framework on BEPS meeting and in order to abide by this minimum standard, there are a number of ways a jurisdiction can abide by Action 14 without entering into a binding arbitration agreement. The most common one is an article covering Mutual Agreement Procedures (MAP) under a tax treaty. (Article 25 of the OECD Model Tax Convention provides a mechanism through which the competent authorities of the Contracting States may resolve differences or difficulties regarding the interpretation or application of the Convention on a mutually-agreed basis. (There are minimum standards with respect to the resolution of treaty-related disputes. Also, some jurisdictions do in fact require that the treaty parties enter into a binding arbitration agreement in some cases.))

In addition to MAPs, Action 14 can also be promoted via bilateral Advanced Pricing Agreements (APAs) and coordinated audits between tax authorities.

So, in a nutshell, there are ways of advancing on Action 14 besides binding arbitration.

And that takes me to the upcoming CIAT Technical Conference on “Advances of the tax administrations in relation to the problem of tax base erosion and profit shifting.” The conference is scheduled for September 18^th through the 20^th, and will be hosted by the Costa Rica tax department. More information can be found at our Website.

Unlike the aforementioned OECD meeting on the Inclusive Framework on BEPS, this technical conference will focus on how countries have been implementing the 15 BEPS Action items. Again, an opportunity for real learning and not being a convert of fake news. The speakers will be members of the CIAT organization (40 member countries, spanning the Americas, Europe, Africa and Asia), OECD and other international organizations. At the meeting, we will hear how jurisdictions have been progressing with the implementation of the BEPS project plan. These speakers will be from developed and developing countries. Demographics, economies and other factors vary from region to region. So, it goes without saying, one-size-does-NOT-fit-all. And that should not be a surprise to anyone. For some CIAT members, the BEPS Action items are like a gift from heaven. For others, let’s just say, from another place. And the reason isn’t just a matter of concurrence with the substance of the initiative. It could be other factors; nature of tax base, political, economics, et al.

I do believe that large economies in our region, the Americas, are keeping an air of open mind-ness. That’s evident with the number of Latin American countries subscribing to OECD ideals. However, reality is still in the eye of the beholder, and there are others that firmly believe that most of the BEPS plan Action items are not to their advantage. And as neutral as we are as an organization, we’re not out to convert anyone, but to provide the facts as they are in clear concise language. We provide the information; you make the call. As always, we respect individuality and stand at all members’ beck and call to provide information that is at our disposal on all tax issues.

So, what’s happening at the CIAT 2017 Technical Conference that may be of interest to you. CIAT member countries will speak on the series of proposed measures and their implementation; national and global experiences with BEPS. There will be a panel discussion on the advances of the tax administrations in relation to BEPS and its challenges. Are tax administrations better off today than they were before BEPS? How are tax jurisdictions providing better cooperation and assistance in a multilateral environment (the benefits afforded by multilateral agreements and mutual support of the parties).

And yes, there’s more, much more!

But wait, do we have a deal for you! On Friday of the conference week, there will be a workshop on “International Taxation.” This workshop is co-sponsored by CIAT, the Inter-American Development Bank and the International Tax Compact. These workshops have become an institution in themselves and provide information via informal presentations, discussions and open forums on a number of subjects. As indicated above, Friday’s workshop will be on “International Taxation.” And what exactly on international taxation, you may ask. Well, some of the topics will be on the global initiative on transparency and exchange of information: operation of the Global Forum, main lines of action, meetings and support actions to member countries. Also on, Ultimate Beneficiary Ownership (UBO): main differences between the Financial Action Task Force (FATF) standards and the Global Forum standard, and aspects related to its effective implementation. So, there should be some interesting discussions.

As always, CIAT Technical Conferences are open to member countries, other national tax administrations and international organizations with whom we maintain ongoing collaboration.

We look forward to seeing you in San Jose next September.

Hasta la vista!

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