handbook-tb

Protecting the tax base of developing countriesIn addition, in order to assess tax on its resident companies andindividuals, a jurisdiction needs to have access to information concerningthe foreign assets and activities of its resident taxpayers. Fordeveloping countries, these issues primarily concern the taxation ofresident individuals, and there have been a number of important internationaldevelopments moving in the direction of automatic exchangeof information (AEOI). The work has been carried out by the OECD incooperation with the G20 17 and foresees being implemented througha multilateral competent authority agreement 18 which builds on theMultilateral Convention on Mutual Administrative Assistance inTax Matters. 196.2 Transfer pricing documentationBoth the United Nations Practical Manual on Transfer Pricing forDeveloping Countries 20 and the OECD Transfer Pricing Guidelinesfor Multinational Enterprises and Tax Administrations 21 contain substantialguidance on the structure and application of transfer pricingdocumentation rules. Such documentation would ideally allow taxadministrations to carry out transfer pricing risk assessment, to assurethat the taxpayer has applied the appropriate transfer pricing methodologyand to assist in the audit of transfer pricing cases. However,currently it is very difficult for countries, developing countries inparticular, to obtain information about the global activities of MNEsoperating in their jurisdiction, where their profits are reported andwhere and how much tax they pay. This information would allow tax17OECD, Secretary-General Report to G20 Leaders, supra note 3.18OECD, Multilateral Competent Authority Agreement, available athttp://www.oecd.org/tax/exchange-of-tax-information/multilateral-competent-authority-agreement.htm.19OECD-Council of Europe, Convention on Mutual AdministrativeAssistance in Tax Matters, 2011, available at http://www.oecd.org/ctp/exchange-of-tax-information/ENG-Amended-Convention.pdf.20United Nations, Department of Economic and Social Affairs, UnitedNations Practical Manual on Transfer Pricing for Developing Countries (New-York: United Nations, 2013).21OECD, Transfer Pricing Guidelines for Multinational Enterprises andTax Administrations (Paris: OECD, 1995).23