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Dispute resolution

Progress continues in making tax dispute resolution more effective and in improving tax transparency through Country-by-Country reporting

 

18/10/2021 - Under OECD/G20 Inclusive Framework on BEPS, 140 jurisdictions have committed to implement minimum standards to improve the taxation of multinational enterprises (MNEs) worldwide. Today, the OECD has released the latest outcomes of the implementation of BEPS Action 13 on the transparency of global operations of large MNEs and BEPS Action 14 on the resolution of tax related disputes between jurisdictions.

 

BEPS Action 13 Country-by-Country Reporting

The BEPS Action 13 minimum standard on Country-by-Country reporting (CbC) requires tax administrations to collect and share detailed information on all large MNEs doing business in their country. Information collected includes the amount of revenue reported, profit before income tax, and income tax paid and accrued, as well as the stated capital, accumulated earnings, number of employees and tangible assets, broken down by jurisdiction.

The fourth annual peer review of BEPS Action 13 considers implementation of the CbC reporting minimum standard by jurisdictions as of April 2020 and covers 132 Inclusive Framework members. Highlights include:

  • Over 100 jurisdictions have already introduced legislation to impose a filing obligation on MNE groups, covering practically all MNE Groups with consolidated group revenue at or above the threshold of EUR 750 million. Remaining Inclusive Framework members are working towards finalising their domestic legal frameworks with the support of the OECD.
  • Where legislation is in place, the implementation of CbC reporting has been found largely consistent with the Action 13 minimum standard.
  • A large number of recommendations made in the first three peer review phases have now been addressed and these recommendations have been removed.
  • More than 3000 bilateral relationships for the exchange of CbC reports are now in place.

The BEPS Action 13 peer review is an annual process and the next peer review report will be released in the third quarter of 2022.

 

BEPS Action 14 Mutual Agreement Procedure

The Stage 2 peer review monitoring reports of BEPS Action 14 evaluate the progress made by Brazil, Bulgaria, China, Hong Kong (China), Indonesia, Russia and Saudi Arabia in implementing recommendations resulting from their Stage 1 peer review. They take into account any developments in the period 1 January 2019 – 31 July 2020 and build on the Mutual Agreement Procedure (MAP) statistics for 2016-2019. Highlights include:

  • The Multilateral Instrument was signed by Bulgaria, China, Hong Kong (China), Indonesia, Russia and Saudi Arabia. It has already been ratified by three of them – Indonesia, Russia and Saudi Arabia – which brings a substantial number of their treaties in line with the Action 14 minimum standard. In addition, there are bilateral negotiations either ongoing or concluded.
  • Bulgaria, China, Hong Kong (China), Indonesia and Saudi Arabia now have a documented bilateral notification/consultation process that they apply in cases where an objection is considered as being not justified by their competent authority.
  • Brazil, Bulgaria, China, Hong Kong (China) and Saudi Arabia have added more personnel to the competent authority function and/or have made organisational improvements with a view to handle MAP cases in a more timely, effective and efficient manner.
  • Hong Kong (China), Russia and Saudi Arabia closed MAP cases within the pursued average time of 24 months, whereas the median time taken by Bulgaria to resolve MAP cases was within this pursued average as well.
  • Russia introduced legislative changes to ensure that MAP agreements can always be implemented notwithstanding domestic time limits, while this was already possible in China and Hong Kong (China).
  • All of the concerned jurisdictions have issued or updated their MAP guidance.

BEPS Action 14 Stage 2 peer review reports will continue to be published in batches in accordance with the Action 14 peer review assessment schedule. In total, 82 Stage 1 peer review reports and 52 Stage 1 and Stage 2 peer monitoring reports have now been finalised and published, with the eighth batch of Stage 2 reports to be released in a few months.

 

 

Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (+33 1 45 24 91 08), or Achim Pross, Head of the International Co-operation and Tax Administration Division (+33 1 45 24 98 92).

 

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