OECD: BEPS implementation update

OECD: BEPS implementation update

The Organisation for Economic Cooperation and Development (OECD) today announced that the OECD and G20 countries have reached an agreement concerning three key elements that will enable implementation of the BEPS project:

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  • A mandate to launch negotiations on a multilateral instrument to streamline implementation of tax treaty-related BEPS measures
  • An implementation package for country-by-country reporting in 2016 and a related government-to-government exchange mechanism to start in 2017
  • The criteria to assess whether preferential treatment regimes for intellectual property (patent boxes) are harmful or not

The OECD also announced it will conduct a webcast concerning these items on 12 February 2015. Read the OECD announcement.

The OECD already presented seven of the 15 elements of the BEPS action plan at the November 2014 summit of G20 country leaders, in Australia, and is scheduled to present the remaining elements by the next summit, in Turkey, in November 2015.

Tax treaty-related BEPS negotiations

Today’s OECD release states that implementation of the BEPS action plan will require modifications to the existing network of more than 3,000 bilateral tax treaties worldwide, but that the planned multilateral instrument will offer countries a single tool for updating their networks of tax treaties in a rapid and consistent manner.

The formation of an ad-hoc negotiating group has been authorized, open to participation from all states. The group will hold its first meeting by July 2015, with an aim to conclude drafting by 31 December 2016


Another key objective of the BEPS project is to increase transparency through improved transfer pricing documentation standards—including through the use of a country-by-country reporting template that requires multinationals to provide tax administrations with information on revenues, profits, taxes accrued and paid, along with some activity indicators.

New guidance presented to the G20 requires country-by-country reporting by multinationals with a turnover above €750 million in their countries of residence starting in 2016.

Tax administrations will begin exchanging the first country-by-country reports in 2017.

Countries have emphasized the need to protect tax information confidentiality. The guidance confirms that the primary method for sharing such reports between tax administrations is through automatic exchange of information, pursuant to government-to-government mechanisms such as bilateral tax treaties, the multilateral convention on mutual agreement assistance, or tax information exchange agreements.

In certain exceptional cases, “secondary methods”—including local filing—may be used. 

Patent box regimes

Determining which intellectual property regimes (patent boxes) and other preferential regimes can be considered harmful tax practices is another key objective of the BEPS project. At the November 2014 summit, G20 leaders endorsed a solution proposed by Germany and the UK on how to assess whether there is substantial activity in an intellectual property regime.

The proposal—based around a “nexus approach,” which allows a taxpayer to receive benefits on intellectual property income in line with the expenditures linked to generating the income—has since been endorsed by all OECD and G20 countries.

Transitional provisions for existing regimes, including a limit on accepting new entrants after June 2016, have been agreed, and work on implementation is ongoing.

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