BEPS – an African Perspective• How relevant is BEPS?• Transparency• Transfer pricing• Base erosion• Other suggestions
How relevant is BEPS?• OECD perspective – developed regimes• Tax havens– CFC rules (esp US?)– stronger LOB– wht?• Hybrids– anti-arbitrage rules (esp US?)• Digital products and services?
BEPS – NGO view• Low income countries collect 13% of GDP in tax• Evasion is part of the problem• “Tax dodging” by multinationals?“The success of the BEPS project should be judged bothagainst its success in reducing double non-taxation andaligning the tax base with economic substance, but alsoin safeguarding poorer countries’ tax bases”Christian Aid Policy Brief, March 2013
Some key issues• Corruption and lack of reliable processes• Lack of capacity in fiscs• Complex, colonial-derived tax systems• Generous treaties and/or tax holidays• Excessive deductions by MNCs?• Risk-shifting by MNCs?
Low priority issues• Country by country reporting– expensive to produce– excessive raw data• Complex TP issues• Unitary taxation– agreement difficult– enforcement complex• DBCT– Distributional effects?– Insufficient reward for assets?
Some suggestions• Resource-based taxation– tax economic rents of mining• Appropriate use of withholding taxes– but beware gross wht on business income• Agreement of OECD to minimum Treaty provisions?• Replace tax holidays with (OECD-funded) developmentgrants?• Focus on non-corporate taxes eg impose social securitycosts on employers?• Practical capacity-building eg dispute resolution andbasic processes
“Even the best research answers to particular questionshave usually turned out to be extremely difficult to applyin practice… There is no magical fiscal medicine, theswallowing of which will always and everywhere bebeneficial. What this complex and changing world needsis less such a non-existent ‘universal fix’ than a fiscalmedicine kit containing a variety of remedies andtreatments”Richard M Bird, Toronto, April 2013
Appendix – further reading• Enough Food for Everyone IF, Policy Report 2013• Multinational Corporations and the Profit-Shifting Lure of TaxHavens, Christian Aid 2013• A Level Playing Field? The need for non-G20 participation in theBEPS process, Christian Aid 2013• Improper use of tax treaties, tax avoidance and tax evasion, PhilipBaker, paper for UN May 2013• Taxation of Natural Resource Rents, Consultation Paper, IMF, 2012• Agreement of Improvements to Resources Taxation, AustralianGovernment Press Release, July 2010• Action Plan for Implementing the AMV, AU Conference of AfricanMinisters, Dec 2011• Foreign Advice and Tax Policy in Developing Countries, Richard MBird, Toronto, April 2013• Lubwe Zambia Fund (www.lubwezambiafund.org)
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