The APPG on Responsible Tax consults on the OECD BEPS Action Plan

ICAEW says OECD has done a good job but success will depend on actual implementation by individual countries

The new All-Party Parliamentary Group (APPG) on Responsible Tax has identified three it wishes to look at initially:

• the work of the OECD on its base erosion profit shifting (BEPS) Action Plan;
• the cost of tax reliefs; and
• the performance of HMRC.

There are more details about the APPG in our news item posted today.

The Terms of reference for the consultation about BEPS were published in November for comment by 21 December 2015. ICAEW has submitted its response, TAXREP 62/15 An examination of the OECD BEPS’ recommendations to the G20

Our general view is that OECD has done an excellent job in an incredibly short period of time. But the success, or otherwise, of the project will depend on the actual implementation by individual countries of what is needed in domestic tax systems and the ability of OECD to build international consensus for a collective approach to changes to bilateral treaties.

In the introductory part of our response, before we addressed the detailed questions in the APPG consultation, we wrote:

“We have reproduced in Annex 2 the text of an article on BEPS published in the December 2015 edition of TAXline, the ICAEW Tax Faculty monthly magazine for its members.

This sets out in broad outline the nature of the BEPS Action Plan, what has been achieved to date and what would appear to be some of the potential difficulties from a UK perspective plus some of the outstanding issues that are going to be addressed in 2016 and subsequently.

As is stated in the article the BEPS Action Plan was decided upon by politicians and project managed by OECD which did a really excellent job in carrying out their work to time and to the satisfaction of the commissioning politicians.

We also believe that OECD did an excellent job in bringing in additional countries to the debate and the BEPS process, in particular from the developing world, so that the present “conclusions” from the Action Plan reflect not just the views of the more developed economies of the world.

The ultimate success, or otherwise, of the Action Plan will depend on the countries involved making the necessary changes to their domestic tax regimes and for there to be a successful multilateral arrangement, to be worked on in 2016, to be able to effect the necessary changes to existing double tax conventions between contracting states without each one having to be separately renegotiated.

The success of tax systems, domestically and internationally, is dependent not only on the actions of governments but also on the actions of taxpayers and their advisers. The necessity of, and the benefits from, this cooperative approach is set out in the earlier OECD work on Tax Intermediaries, see the Cape Town Communiqué of January 2008 http://www.oecd.org/ctp/administration/39886621.pdf and the Tax Intermediaries final report http://www.oecd.org/ctp/administration/39882938.pdf. In its subsequent work OECD has re-categorised enhanced cooperation, the term it used in 2008, as cooperative compliancehttp://www.keepeek.com/Digital-Asset-Management/oecd/taxation/co-operative-compliance-a-framework_9789264200852-en%20#page14. We believe there has been a subsequent change in approach by both tax advisers and their clients so that a more cooperative approach is emerging from all the relevant participants in tax systems and one of the consequences of this change in approach is that tax systems are more likely to perform as it is intended they should.

It is too early at the present time to seek to establish whether the BEPS Action Plan has been a success or not: it is work in progress and more time needs to be allowed before one can attempt to answer such a question.”

We intend to work with the APPG to provide our perspective on the issues they are addressing and to try to ensure that the outcomes from their work are robust and well thought through. If any readers have comments on the initial consultation, or on the work of the APPG more generally, then please get in touch with Ian Young ian.young@icaew.com