Remarks by Angel Gurría,
11 September 2015
(As prepared for delivery)
Ministers, Ladies and Gentlemen:
I am delighted to join you to discuss the starting point -- tax -- of the Cebu Action Plan, which we have been working on very closely with your officials and with the Presidency throughout the course of this year.
It was an honour for the OECD to share its expertise to support your objectives under the Cebu Action Plan, including on the critical tax elements which, I believe, can deliver important benefits to APEC economies if the “Plan” is turned into “Action”. Leveraging off the work being done on the global stage on international taxation, APEC economies will be able to maximise the benefits by tailoring that work to its specific context, and ensuring that it meets your specific needs.
Tackling Base Erosion and Profit Shifting (BEPS) by multinational enterprises has received significant public attention over the past few years. Governments are eager to address the mismatches in the international tax system that have allowed the location of economic activity and value creation to be separated from the location of taxation. The international tax system must be updated to meet the realities of a globalised economy and the rapidly changing business models of the digital world.
The solutions to address BEPS which will be delivered at the start of October have involved most APEC economies. Across the globe, over 100 countries have contributed to this important initiative, with more than a dozen developing economies participating directly in the technical working groups and decision-making body, and an even broader perspective has been brought to the table through five regional networks – the Asia-Pacific Regional Network on BEPS is co-chaired by Korea and Indonesia – and through bilateral programmes by which we have supported economies on issues such as transfer pricing and tax incentives.
The BEPS Project will equip you with the instruments to collectively re-establish your tax sovereignty - which has been eroded by tax avoidance over recent decades - and avoid a race to the bottom.
The package is almost finalised and the actions agreed under the BEPS Project will curtail tax treaty abuse, address potentially harmful tax practices, enhance transparency on tax rulings with cross-border impacts, provide access to key data regarding the structure of large multi-nationals and also improve the dispute resolution mechanism between governments. Its implementation will have an impact for all economies as it puts an end to double non taxation. It is not about how to share the rights to tax but making sure that the pie to share stops shrinking!
What is at stake is the restoration of the confidence of your citizens in the fairness of our tax systems. People cannot understand why we would leave open massive gaps in our international tax rules at a time where tax contributions from those who cannot plan their tax affairs have never been so high. Closing these gaps is especially important for developing economies, which will benefit enormously from this work as they rely more heavily on corporate income tax revenues.
The Cebu Action Plan is quite timely as we must already be thinking of what is next, to make sure that this unprecedented work produces its intended effects. Implementation is key to ensure the success of the project, notably making sure economies implement their commitments and that tax administrations use the new instruments properly to secure revenues, while avoiding risks of double taxation.
But implementation must be global and inclusive: tax loopholes should not shift from some economies to others and it is essential to level the playing field. Equally important is the need for developing economies, particularly in the Asia-Pacific region, to have their say and be fully involved on an equal footing. Developing economies must also be “equipped” to make the most of this new tax environment – and we are developing toolkits, jointly with our colleagues from other International Organisations, to that aim. Moreover, the OECD has just launched with the UN the "Tax inspectors without borders initiative" which will also support capacity building in international tax matters in developing economies. Building on the engagement we have had already, I look forward over the coming months to develop a new inclusive framework, open for the participation on an equal footing of all interested economies.
Tax transparency also features highly in the Cebu Action Plan. While enormous progress has been made to eliminate bank secrecy and shut down the opportunities for tax evasion in the last five years, we cannot be complacent. Fighting againsttax evasion requires a global level-playing field – we cannot allow some jurisdictions to benefit at the expense of those that meet their commitments. I strongly welcome APEC’s support for member economies to implement information exchange on request, and automatic exchange.
In this respect, and building on its South East Asia Regional Programme, the OECD stands ready to provide support for APEC economies seeking to implement the tax transparency standards – and already have in place a number of pilot projects, such as that established between the Philippines and Australia, allowing them to share their experiences and best practices to develop an efficient, cost-effective system for automatic exchange of financial account information.
We have also seen growing demand from economies for our support to tackle tax crimes and other serious financial crimes. In response to the demand, in 2014, we established the International Academy for Tax Crime Investigation – with intensive programmes to train officials from tax administrations, financial investigation units, and justice and finance ministries.
That programme remains open for participation by officials from APEC members, and we look forward to exploring with you the opportunity to open a regional centre in Asia to make that training more accessible and more tailored to the specific risks that you face in the region. Tackling serious financial crime requires significant cross-agency, as well as cross-border cooperation. We must ensure that internal procedures do allow for information sharing efficiently, while protecting the safeguards on the use and dissemination of information.
Your agenda under the Cebu Action Plan is ambitious, and the OECD aims to deliver concrete outcomes that will deliver a stronger framework for sustainable growth across APEC.