handbook-tb

Transparency and disclosurerules and possibly a foreign language. Second, it is not clear what informationthe requesting jurisdiction must provide to make this request.One of the long-standing problems with treaty-based exchange ofinformation provisions has been the requirement imposed on requestingjurisdictions to provide upfront details regarding the underlyingtaxpayer and the matter being investigated. This requirement wouldcontradict one of the core functions of Action 13 — allowing countriesto make more meaningful BEPS risk assessment early in the process.Yet depending upon the precise treaty provision under which the countryis making the request for information, it might need to know muchmore information in order to request the master file and template. Notonly would this be difficult to accomplish in some cases, it will inevitablyrequire more audit resources simply to secure the informationintended to provide the risk assessment tools. Developing countrieswill be able to take these steps for fewer taxpayers, thus decreasing thebeneficial impact of Action 13.Second, tax administrations generally are seeking to makethe audit process more contemporaneous. Working through a treatymechanism to obtain the master file and CbC template, particularly ifthe requesting country must provide detailed supporting information,would only extend the audit process.Third, developing countries are less likely to have MNEs withthe parent located in their jurisdiction. As a result, a much largerportion of their enforcement work to combat BEPS would requirethe preliminary step of seeking master files and CbC templates fromother countries. In contrast, developed countries typically have moremultinationals headquartered in their jurisdictions and would (undera system of filing only in the parent country) have the informationautomatically available. Moreover, these developed countries wouldlikely be especially, though not exclusively, interested in BEPS on thepart of their own major multinationals. Thus, although all countrieswould (under this approach) be required to seek information via treaty,the burden would be most significant for developing countries whichare resource-constrained, dependent upon corporate income taxesand have few domestic multinationals.535