BEPS Action Plan: Action 11 – Data and methodologies

It appears to us, from action 11 of the BEPS Action Plan, that the OECD has not yet given up on continued economic analysis of existing data to determine the scale of BEPS — and that the objective now is to establish methodologies to collect and analyse data on BEPS, and to focus on actions to address it. Our commentary is below.

 

Updates

 

19 August 2014

The OECD’s request for input invites public comments regarding work on establishing methodologies to collect and analyse data on BEPS and the actions to address it but ...

it’s largely targeted at academics. It may be useful at this stage though to see a commitment to principles that any BEPS measure should satisfy that would emphasize exploitation of existing data (including new transfer pricing and country-by-country information) rather than imposing additional reporting burdens on business.

The findings may not be that obvious and there could be a paradox that BEPS increases corporate tax revenues. The scale of productive activity in the host country could be greater in a similar way that it has been found that reductions in the statutory corporate tax rate have not reduced the tax to GDP ratio in many OECD countries.

There should be another opportunity to comment when the OECD sets forth proposed BEPS metrics in a future consultation document.

 

10 September 2013

The action point also recognises the importance of taking into account the need to respect taxpayer confidentiality, although there remain concerns …

about the security of data transmission and handling and a level of scepticism from business on use of data by some tax authorities. There may, for example, be commercial sensitivities around new ventures which aren’t respected and disclosure of certain data may have an impact on price-sensitive information.

 

2 September 2013

Care will be needed to ensure that any new types of data to be collected for the purposes of assessing BEPS, and actions to address it, don’t …

impose a significantly greater burden on business. That includes also any reference to more public reporting on a ‘country by country’ basis or otherwise.

 

28 August 2013

It makes considerable sense to try to work out what additional data would be needed in order to provide trend and impact information in future …

The G8 conclusions of the Northern Ireland summit included: commitments on reporting by large companies to tax authorities according to an agreed template; beneficial ownership registers; and automatic sharing of information. So it is possible that requests for information from business could be moulded into those requirements.

Data and methodologies archive

26 August 2013

The OECD’s February 2013 report on BEPS considered available studies and found little of substance to shed light on…

the scale and impact of BEPS. It seems the OECD has not yet given up on continued economic analysis of that data — and that the objective now is to establish methodologies to collect and analyse data on BEPS and to focus on actions to address it.

 

19 July 2013

There is recognition that there has been a lack of hard evidence to quantify the extent to which governments lose substantial corporate tax revenue …

because of planning aimed at eroding the taxable base and/or shifting profits to locations where they are subject to a more favourable treatment. The Plan seeks to correct this in future and also to enable analysis of the impact of the various actions which are implemented. Part of this work will require an assessment of the kind of data which taxpayers are required to report to tax authorities.

It is welcome that the action, which will take two years to deliver, identifies the need for taxpayer confidentiality to be respected and for the administrative burden on business to be considered.



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