OECD introduces first elements for implementing BEPS plan


By Alistair M. Nevius, J.D.

The Organisation for Economic Co-operation and Development (OECD) and the G20 countries have agreed on three elements that represent the first steps towards implementation of the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS). The OECD announced the three elements on Friday.

The first element is a mandate to launch negotiations on a multilateral convention that will streamline the implementation of tax-treaty-related BEPS measures. Under the mandate, an ad hoc negotiating group will be formed, with the goal of finishing a draft multilateral instrument by the end of 2016.

The second element is guidance that will lead to country-by-country reporting in 2016 and government-to-government information exchange in 2017. The country-by-country reporting guidance will require multinational groups that have annual revenue above €750 million ($850 million) in their countries of residence to report information relating to the global allocation of the multinational’s income and taxes paid, along with indications of the location of economic activity within the group.

Finally, the OECD is also adopting criteria for determining whether preferential intellectual property regimes (ie, patent boxes) can be considered harmful tax practices. The criteria are designed to allow taxpayers to receive tax benefits on intellectual property income in line with the expenditures linked to generating that income.

Alistair Nevius (anevius@aicpa.org) is CGMA Magazine’s editor-in-chief, tax.

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