OECD DEVELOPMENTS Dali Bouzoraa IBFD

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OECD DEVELOPMENTSDali BouzoraaIBFD

• 3rd Asia/Africa IFA ConferenceMauritius, 14-15
  May 2009

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OECD DEVELOPMENTS

• 2008 MC AND COMMENTARY
• ATTRIBUTION OF PROFITS TO PEs
• POEM
• NON-DISCRIMINATION
• EMERGING ISSUES
• BUSINESS RESTRUCTURING
• TAX INTERMEDIARIES
• CIV
• EFFECTIVE EXCHANGE OF INFORMATION
• .

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ATTRIBUTION OF PROFITS TO PEs

• REPORT ON ATTRIBUTION OF PROFITS TO PES
• EXTENSIVE PUBLIC DEBATE
• AOA (FUNCTIONALLY SEPARATE ENTITY APPROACH)
  INCORPORATED IN COMMENTARY IN 2008 RELEASE
• NEW DRAFT VERSION OF ART. 7 PROPOSED
• PUBLIC COMMENTS PUBLISHED JANUARY 09

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ATTRIBUTION OF PROFITS TO PEs

• FACTUAL ANALYSIS
• FUNCTIONS (SPF or KERT)
• RISKS
• ASSETS
• BASED ON ABOVE ATTRIBUTION OF FREE CAPITAL
• APPLICATION OF OECD TP GUIDELINES BY ANALOGY

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POEM

• REMOVAL OF 2000 ADDITION SUGGESTING CENTRAL
  MANAGEMENT AND CONTROL
• REPLACE DUAL RESIDENCE TIE-BREAKER BY COMPETENT
  AUTHORITY PROCEDURE
• IN THE ABSENCE OF AGREEMENT, IN PRINCIPLE NO
  RELIEF UNDER THE CONVENTION (but information on
  the persons may be exchanged)

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NON-DISCRIMINATION

• OBJECTIVE CONTAINING THE ECJ INFLUENZA
• ANALYSIS LIST ALL WHAT ECJ DID
• SOLUTION REVERSE ALL WHAT ECJ DID

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NON-DISCRIMINATION

• NO MFN
• NO BETTER TREATMENT THAN DOMESTIC ENTERPRISES
• NO EXTENSION OF DOMESTIC RULES (CONSOLIDATION
  TRANSFER OF LOSSES, ETC..)

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BUSINESS RESTRUCTURING

• CROSS-BORDER REDEPLOYMENT OF FUNCTIONS, ASSETS
  AND/OR RISKS
• e.g. FULLY-FLEDGED MANUFACTURER TO
  TOLL/CONTRACT MANUFACTURER
• IMPACT ON PROFIT AND LOSS POTENTIAL IN COUNTRIES
  INVOLVED
• REPORT SUBMITTED FOR PUBLIC COMMENT IN SEPT. 08.
  SUBSTANTIAL COMMENTS DELIVERED.

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BUSINESS RESTRUCTURING

• RISK BORNE BY ENTITY CONTROLLING RISK
• (ECONOMIC SUBSTANCE OR SPF?)
• COMPENSATION ONLY IF ASSETS ARE TRANSFERRED
• POTENTIAL FUTURE PL NOT AN ASSET (but carried by
  assets/rights)
• APPLICATION OF ALP TO POST-RESTRUCTURING
  ARRANGEMENTS
• TA MAY DISREGARD TRANSACTION EXCEPTIONALLY

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TAX INTERMEDIARIES

• INVOLVING TAX INTERMEDIARIES IN VOLUNTARY
  COMPLIANCE
• TWO REPORTS
• LARGE CORPORATE SEGMENT
• HNWI
• CARROT AND STICK APPROACH
• DISCLOSURE OF TAX MINIMIZATION STRATEGIES
• CONSIDERATE AFFECTION OF TAX AUTHORITIES

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CIV

• INFORMAL CONSULTATIVE GROUP FORMED IN 2006
• CONSIDER LEGAL ISSUES AFFECTING ABILITY OF CIVs
  AND OTHER PORTFOLIO INVESTORS TO CLAIM TREATY
  BENEFITS
• TWO REPORTS RELEASED IN JANUARY 09
• GRANTING OF TREATY BENEFITS WITH RESPECT TO
  THE INCOME OF CIVs
• POSSIBLE IMPROVEMENTS TO PROCEDURES FOR TAX
  RELIEF FOR CROSS-BORDER INVESTORS

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CIV

• RECOMMENDATIONS
• EXISTING TREATIES
• IF NOT SPECIFICALLY ADDRESSED THEN
  LOOK-THROUGH. ALLOW CIV TO LODGE CLAIMS ON
  BEHALF OF INVESTORS
• FUTURE TREATIES
• TT SHOULD ADDRESS CIVs SPECIFICALLY
• RESIDENCE IN OWN RIGHT PREFERRED (ADD OPTIONAL
  LANGUAGE TO COMMENTARY ON ART. 1 MC)
• PROCEDURES ALLOW POOLED CLAIMS - QI
• EU DEVELOPMENTS

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EFFECTIVE EXCHANGE OF INFORMATION

• HISTORICAL OVERVIEW
• VARIOUS INSTRUMENTS
• (DTT, MUTUAL ASSISTANCE AGREEMENTS, EU MAD,
  COUNCIL OF EUROPE/OECD CONVENTION, NORDIC
  CONVENTION)
• MANY IMPEDIMENTS
• TREATY NETWORK
• SCOPE OF COVERAGE (PRE-2000 MC)
• NATIONAL LAWS ADMINISTRATIVE PRACTICE
• TAXPAYER PROTECTION

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EFFECTIVE EXCHANGE OF INFORMATION

• THE EVOLUTION
• TAX INFORMATION EXCHANGE DEEMED INEFFECTIVE
• OECD PUBLISHES 1998 REPORT ON HARMFUL TAX
  COMPETITION
• REPORT IDENTIFIES LACK OF EFFECTIVE EXCHANGE OF
  INFORMATION AS ONE OF KEY DETERMINANTS FOR
  HARMFUL TAX PRACTICES
• OECD PERCEIVED TO PURSUE TAX HARMONIZATION BY
  FOCUSING ON RING-FENCING AND TAX RATES
• FIRST BUSH ADMINISTRATION SHIFTS FOCUS ON
  EXCHANGE OF INFORMATION AND TRANSPARENCY

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EFFECTIVE EXCHANGE OF INFORMATION

• THE EVOLUTION
• OECD PUBLISHES 2000 REPORT ON IMPROVING ACCESS TO
  BANK INFORMATION FOR TAX PURPOSES
• OECD RELEASES FIRST LIST OF UNCOOPERATIVE
  JURISDICTIONS (2002)
• OECD RELEASES MODEL AGREEMENT ON EXCHANGE OF
  INFORMATION ON TAX MATTERS (2002)
• OECD REVISES ART. 26 MC (2005)
• FINANCIAL AND ECONOMIC CRISIS SKY FALLS ON TAX
  HAVENS

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EFFECTIVE EXCHANGE OF INFORMATION

• NOVELTIES OF AGREEMENT / NEW ART. 26
• FORSEEABLY RELEVANT
• EVEN IF NOT NEEDED FOR OWN TAXATION PURPOSES
• INCLUDING OWNERSHIP INFORMATION AND INFORMATION
  HELD BY BANKS AND PERSONS ACTING IN FIDICIUARY
  CAPACITY
• REQUESTED STATE TO USE ALL NECESSARY INFORMATION
  GATHERING MEASURES
• RIGHTS AND SAFEGUARDS SECURED TO PERSONS TO BE
  RESPECTED TO THE EXTENT THEY DO NOT UNDULY
  PREVENT OR DELAY EFFECTIVE EXCHANGE OF
  INFORMATION

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EFFECTIVE EXCHANGE OF INFORMATION

• TYPES OF EXCHANGE
• EXCHANGE UPON REQUEST
• AUTOMATIC EXCHANGE
• SPONTANEOUS EXCHANGE
• TAX EXAMINATIONS ABROAD (SIMPLE PRESENCE)
• ACTIVE TAX EXAMINATION ABROAD
• INDUSTRY-WIDE EXCHANGE
• 20002 AGREEMENT 1 4 5
• NEW ART. 26 1 2 3 (BUT REST NOT EXCLUDED)

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• THANK YOU
• D.Bouzoraa_at_ibfd.org