Communiqué of Meeting of G-20 Finance Ministers and Central Bank Governors

Par Robert Robillard - 23 septembre 2014

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Department of Finance Canada has reproduced the G20 communiqué here.

In annex to the communiqué, we find the « OECD Secretary-General Report to the G20 Finance Ministers and Central Bank Governors, September 2014 » which pertains to « Part I – Base Erosion and Profit Shifting, Automatic Exchange of Information and Tax and Development », and « Part II – Global Forum on Transparency and Exchange of Information for Tax Purposes ».

From the report:

« This report sets out the progress on these areas:

  • The OECD/G20 BEPS Project delivers the first outputs of the BEPS Action Plan, with measures developed by OECD and G20 members working together, and agreed by consensus;
  •  A single common global standard on Automatic Exchange of Information (AEOI), the “next generational” tool to address tax evasion, has now been finalised, including all the technical modalities, and is ready for implementation;
  • Highlights the specific challenges faced by low income countries in tackling key international tax issues, including BEPS, and in fighting illicit financial flows including tax evasion.
  • The Global Forum on Transparency and Exchange of Information for Tax Purposes has continued to closely review jurisdictions’ commitments to the international standard for exchange of information on request, determining overall country ratings, and also outlining a process to monitor commitments to AEOI and a roadmap for developing countries seeking to implement AEOI effectively. »

On BEPS the report states (p. 7):

« The BEPS Project has brought together 44 countries working on an equal footing: all OECD members and the BEPS Associates (the 8 non-OECD G20 countries, i.e. Argentina, Brazil, People’s Republic of China, India, Indonesia, Russia, Saudi Arabia, and South Africa, as well as Colombia and Latvia).

Over 80 developing countries and other non-OECD/non-G20 economies have been consulted through four in-depth regional consultations and five thematic global fora, and their input has been fed directly into the BEPS process. Further, it has informed the development of a dedicated two-part report prepared by the OECD under a mandate from the G20 Development Working Group, addressing the specific challenges and priorities of low-income countries faced with BEPS issues. These in-depth engagement processes will be institutionalised in the coming months of the BEPS Project (see further the Tax and Development section of this report).

Business representatives, trade unions, civil society organisations and academics have also been very involved through opportunities to comment on discussion drafts which have generated more than 3 500 pages of comments, as well as five public consultations and three BEPS webcasts which attracted over 10 000 viewers. »

On the recently released BEPS deliverables discussed here, here, here and here, the report indicates (p. 8):

« Agreement on key policy matters for the 2014 deliverables has been secured and the relevant rules have been drafted, with some technical implementation issues to be further developed in 2015. As implementing and administering the rules are key to improving certainty for both taxpayers and tax administrations, additional work will be carried out in a number of areas to ensure a consistent and co-ordinated application of the agreed rules. This will reduce compliance costs for both businesses and governments, eliminate potential arbitrage opportunities among rules implemented differently, and minimise the risk of double taxation that could otherwise arise. »

Next steps on BEPS are also presented (p. 9):

« The 2015 deliverables include work on the design of effective controlled foreign company (CFC) rules to provide countries with tools to tackle the large amounts of untaxed profits booked offshore (Action 3). It will also focus on best practices for rules that prevent base erosion via interest deductions and other financial payments (Action 4). Work will continue steadily to prevent harmful tax practices (Action 5), with a specific focus on preferential IP regimes. Substance in international standards will be further restored by preventing the artificial avoidance of permanent establishment status (Action 7), an issue of particular importance for developing and emerging economies. The review of transfer pricing rules to ensure that the outcomes are in line with value creation will be completed (Actions 8-10).

In the area of transparency, recommendations regarding domestic rules to require the disclosure of aggressive tax planning arrangements (Action 12) will be developed. To fill the existing data-gap, the OECD/G20 BEPS Project will establish methodologies to collect data and carry out economic analyses on BEPS and its spill-over effects across countries (Action 11). Dispute resolution among tax administrations will be made more effective (Action 14). Last but not least, a draft mandate for an international conference will be considered by the OECD’s Committee on Fiscal Affairs (CFA) in January 2015 for the negotiation of a multilateral convention to streamline the implementation of the BEPS Action Plan (Action 15). »

The report also discusses the Automatic exchange of information (AEOI) (p. 11):

« The AEOI Standard consists of two components: 1) the CRS (Common Reporting Standard) which contains the reporting and due diligence rules to be imposed by participating jurisdictions on their financial institutions; and 2) the Model CAA (Competent Authority Agreement), which contains the detailed rules on the exchange of the information. This is supplemented by the full technical modalities delivered in this report: a detailed commentary on the AEOI Standard, and the technical specifications on both data format/schema and standards on data transmission. As envisioned, concluding the technical modalities also resulted in a small number of technical corrections to the AEOI Standard itself. »

The report adds:

« Under the Standard, jurisdictions obtain financial information in accordance with the CRS and automatically exchange that information with other jurisdictions, as appropriate, under a CAA on an annual basis.

Under the CRS, to prevent taxpayers from circumventing the Standard, information is collected by financial institutions on the basis of common reporting and due diligence rules. »

For American and Canadian perspectives on AEOI see this RBRT post and that RBRT post.

Regarding the Global Forum on Transparency and Exchange of Information for Tax Purposes, the report suggests that (pp. 17-18) Cyprus, Luxembourg, the Seychelles, and the Virgin Islands (British) are the only remaining non-compliant countries. This part of the report concludes:

« Regarding AEOI, a detailed report on the status of commitments to implement the AEOI Standard will be delivered to the G20 Leaders in November. Subsequently, in 2015 the Global Forum will finalise the terms of reference and methodology for monitoring the implementation of the AEOI Standard through a review process which is expected to commence in 2016, complementing the peer review process on EOI on request. »

Robert Robillard, CPA, CGA, MBA, M.Sc. Econ.
Transfer Pricing Chief Economist, RBRT Inc.
514-742-8086; robert.robillard « at » localhost
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