ey-global-tax-policy-outlook-for-2015

to understand; if governments are
going to agree to changes to the Model
Convention, we can’t afford to wait
for bilateral treaty changes to deliver
results, something that can take from
10 to 15 years. The important thing is
that the multilateral instrument only
comes into play once there is agreement
on the substance. So it’s purely a
technical initiative on how to get a
quick implementation.
Into 2015
Looking forward, the Actions where I
Action 5 (Harmful tax practices) and
more generally on the interface between
the different Action points that relate
to transfer pricing. Then, of course, the
remaining eight Actions. That’s going to
be a whole new set of challenges but,
their deadlines.
to distinguish between the emphasis
that’s being placed on the transparency
issues and the fact that, even before the
so-called Luxembourg leaks, countries
had already agreed to automatic
exchange on rulings. The recent
European Commission developments
on this issue, where we expect a new
to those within the BEPS Project.
The second aspect that’s important is
the focus on intellectual property and
patent boxes. There’s still quite a lot of
work there to see how the patent box
United Kingdom can be implemented,
and new countries may well demand
transitional rules that the United
Kingdom has gained. There is a danger
here that we’ll go down the same route
as we went down 15 years ago with
tonnage taxes, whereby we could see
a large extension of low-rate IP boxes
around the world that are broadly
consistent with Action 5 but which
undermine the corporate tax base.
Transfer pricing
In regard to transfer pricing, it wasn’t
surprising that fast progress was made
in the area of intangibles, as a lot of the
groundwork had already been done prior
pricing area is that, again, you can’t look
at one Action point in isolation — you
need to look at all of them in context
of one another. Here, again, is a case
of nothing being agreed upon until
absolutely everything is in place. That
can generate uncertainty for business..
getting through that this is going to
happen and that companies need to
start preparing. Just a year ago, there
were many people who still thought it
wasn’t going to be delivered. But we
now know that it’s a reality. There are
still some key open issues, and we still
need to see more detail on how it’s all
going to be implemented, but the basic
standards are now there and it’s going
but important question is whether the
information will be transmitted by the
usual treaty route, and if so, what are the
resource implications of that and how will
countries meet the timing deadlines
My own view is that there’s a good
looking at the underlying technical
platforms, to bypass the traditional
treaty route, to try to minimize the
compliance burden for companies and
to maximize the value of the information
to countries.
When you consider that we will now have
automatic, spontaneous and on-request
exchange of information, country-bycountry
reporting and transfer pricing
is that tax administrations are going
to have unprecedented access to
information. But some of them aren’t
able to leverage the information that
they already have today.
So the question is whether governments
are going to be willing to make the
investment into how they use all this
data. It would be a real waste of effort
on everyone’s part if this mass of
information ended up left to rot in a box
somewhere. And of course, the whole
of country–by–country reporting will be
reviewed in 2020, so it’ll be fascinating
to see what the negotiations focus on at
that point.
Disclosure
Action 12 on disclosure of aggressive
tax planning arrangements is going to
be an interesting one in 2015. It should
forward on this. They’ll be picking up
on the experiences of Australia, the UK
and the United States, countries that
already have regimes in place. This is
all part of the general tendency to have
The outlook for global tax policy in 2015 |
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