Tax proposals for multinationals will have ‘massive impact’

OECD propose country-by-country reports on their financial affairs

Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the OECD, addressing a meeting in the Mansion House via Skype last year.

Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the OECD, addressing a meeting in the Mansion House via Skype last year.

 

Proposed new obligations on multinationals to produce country-by-country reports on their financial affairs will have a “massive impact” on them, a leading member of the Organisation for Economic Development and Cooperation has said.

Pascal Saint-Amans , director of the Center for Tax Policy and Administration at the OECD, was reacting to what he said were “angry responses” to the organisation’s latest proposals on the topic.

He said the proposals had been agreed by more than 60 countries and that the views of an organisation representing African countries was reflected in them. He said the proposed moves would be a “game changer”.

The country-specific information, which will begin to be supplied to tax administrations from the middle of 2018 under the OECD proposals, will be confidential to tax authorities which will be able to use the information for “risk assessment” rather than audit reasons.

Under the rules, multinationals will be required to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the multinational group, the OECD said.

They will also supply information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

A statement on an implementation package for country-by-country reporting was released by the OECD as representatives of the organisation took part in a webcast giving the latest update on the so-called Beps (Base Erosion and Profit Shifting) proposals aimed at combatting aggressive tax planning by multinationals.

Mr Saint-Amans, during the webcast, said there had been some “angry comments” in response to the country-by-country proposals.

While the information to be released by the companies would not be made public, it would be a “game changer,” he said. It would have a massive impact on taxpayers and on tax administrators as well, and the implementation of the new measures would be monitored.

He said the OECD was on target to deliver its Beps proposals for a meeting of the G20 finance ministers on October 8th, so they could be agreed prior to the meeting of G20 leaders on November 14th.

He said developing countries are more exposed to the negative consequences of aggressive mutinational tax planning and that their increased involvement in the Beps project will form part of the post-Beps, implementation agenda.