BEPS Action Plan: Action 12 – Disclosure of aggressive tax planning

The OECD is aiming to require taxpayers to disclose aggressive tax planning arrangements. Action 12 of the BEPS Action Plan targets this objective. Below, we provide commentary and links to content around this important action point.



30 June 2017

The European Commission has published a draft Directive reflecting elements of BEPS Action 12 broadly to:

require the taxpayer or the lead intermediary within the EU to report to their own tax administration various cross-border tax planning arrangements. The taxpayer would be required to make the necessary disclosure where there is no EU intermediary (e.g. in-house corporate tax planning or use of non-EU intermediaries).

Definitions in the draft Directive are broad for "intermediaries", "cross-border arrangement" (BEPS 12 recommends that the term "arrangement" should be defined, which the proposal has not done), “main benefit test”, and “reportable” transactions by reference to a range of specific hallmarks.

There are no filters for existing structures/ repeat arrangements, where exchange of information through other channels (e.g. tax rulings) or where using a known/ approved incentive (e.g. patent box).

The timing proposed is based on a five-day turnaround.

It is currently proposed that this would be effective from 1 January 2019 with a quarterly exchange by tax administrations, using a central database, foreseen within one month of the end of each quarter. However, there would also be retrospective reporting on arrangements implemented between the date of political agreement and 31 December 2018, to be disclosed by 31 March 2019.


15 September 2016

Our Swedish blog post describes how the Budget refreshed the idea …

raised as part of a ten point anti-avoidance plan to introduce a disclosure obligation for tax advisors to the Tax Agency as regards tax arrangements


28 January 2016

Some countries may introduce or enhance their existing MDRs, but it is important to see such regimes clarify that …

the fact that a transaction is reportable does not necessarily mean that it involves tax avoidance. However, disclosure does not imply that a tax authority will accept the transaction.

We note though – see our Tax Policy Bulletin of 28 January 2016 – we are more likely to see greater activity via the increased levels of sharing between tax administrations at a general level (e.g., through the enhanced Joint International Tax Shelter Information and Collaboration (JITSIC) Network, part of the OECD-led Forum on Tax Administration) or in specific cases involving competent authorities.


10 December 2015

The ECOFIN Council in its meeting of 8 December invited the EU Code of Conduct Group to assess the opportunity of …

developing EU guidance for implementing OECD BEPS conclusions on Action 12, notably with a view to facilitate exchange of such information between tax authorities.


5 October 2015

Countries are still free to choose whether or not to introduce mandatory disclosure regimes but…

For domestic arrangements, the recommendations are not materially different and aim to provide options on how to balance a country’s need for better and more timely information with the compliance burdens for taxpayers.

The Report’s specific recommendations for rules targeting international tax schemes have been considerably reined in. They refer now to situations in which a country has particular concerns in relation to cross-border BEPS outcomes. The Report also now limits the recommendation to disclosures only where a taxpayer in that country enters into a transaction with material domestic tax consequences for it:

  • if it was aware or ought to have been aware of the cross-border BEPS outcome, or
  • if, after making reasonable enquiries, it becomes aware that it is an intra-group transaction that forms part of an arrangement that includes a cross-border BEPS outcome that would have been domestically reportable.

Greater reliance is, as a result, placed on specific recommendations for the development and implementation of more effective information exchange and co-operation between tax administrations. The Joint International Tax Shelter Information Centre (JITSIC) network of tax administrations will be used as a platform for such sharing.


4 May 2015

consolidated document on Action 12 has been published by the OECD comprising our response and the 19 others.


30 April 2015

In our response to the OECD on BEPS Action 12, we commend the Working Group for its efforts in identifying a modular approach but...

we think the OECD should make it clearer whether or not it recommends countries implement Mandatory Disclosure Rules. In particular, we are uncertain at this time whether the OECD agrees that a thorough analysis is needed to ascertain any gap that remains to be filled if countries adopt all the other BEPS action items. To the extent that such an analysis can only be made after implementation of the BEPS package, it makes more sense to delay the policy recommendations of Action 12.

However, we also have concerns in a number of specific areas, notably with respect to the reporting of certain international tax arrangements, and believe further consideration is needed. In particular, we believe that reporting of such international tax arrangements should be restricted to mass marketed schemes.

The response reflects the views of the PwC network of firms, and we offer our observations on several key aspects of the Discussion Draft, many of which relate to the options for including international tax arrangements.


2 April 2015

A new discussion draft of 31 March 2015 deals primarily with the first two elements of this part of the BEPS package...

  • Design of mandatory disclosure rules or a mandatory disclosure regime (MDR); and
  • A focus on international tax schemes

The other elements,

  • Coordination with work on cooperative compliance; and
  • Enhanced models of information sharing between tax administrations,

will be addressed in due course, partly under BEPS and partly in other initiatives.

We recognise the need to identify mass marketed pre-packaged schemes or those which rely on limited or no disclosure and which aim to provide absolute tax benefits or cash flow advantages from delays in paying the tax due. However, the challenge will be to target such schemes without creating an enormous compliance burden for the vast majority of MNEs and intermediaries whose commercial affairs happen to need cross-border advice.

Significant work may be needed to confirm whether a disclosure has to be made following the introduction or extension of a specific regime as put forward in this discussion draft. In many cases, the outcome will be that no disclosure is needed.

Changes in international tax standards and other promised increases in cooperation between jurisdictions and alternative methods for addressing avoidance activity also suggest a serious review of the costs and potential benefits is needed before the recommendation of any new disclosure regime for international tax arrangements.


2 September 2013

We support targeted transparency in this area. Experience of tax planning disclosure requirements (e.g., UK, US) suggests care is needed to make sure …

they are suitably focused to avoid disproportionate levels of reporting (for both business/advisers and tax administrations) and unnecessary costs.

This seems to be the arena where it will be easier to find consensus at the international level, particularly bearing in mind the work in this area carried out by the OECD in the past. Best practice has been established by those with current disclosure regimes and the modular approach recommended will allow them to comply with any new standard with minimal changes.


19 July 2013

Domestic ‘disclosure initiatives’ to require the reporting of arrangements largely set up to deliver a ‘tax benefit’ (to be widely defined) will be encouraged …

by reference to best practice and existing experience where jurisdictions already have such regimes. The ‘modular approach’ to be recommended will mean that jurisdictions will be able to keep any existing measures, but add to them if desired. The more real-time relationships established in a number of countries, following the OECD’s project on cooperative compliance as reported in our October 2012 Bulletin, are identified as ‘useful measures’ to help taxpayers with such reporting.

There will be a particular focus on international tax schemes and on sharing such information between jurisdictions. This is no doubt seeking to build on the relatively successful work of the Joint International Tax Shelter Information Centre (JITSIC) which has operated since 2004, and which has more recently included participation by the US, UK, Canada, Australia, Japan and China.

These reporting regimes are expected to be operational — with information sharing taking place — within two years.