OECD BEPS Action Plan - Country Responses to the OECD BEPS Recommendations

OECD BEPS Action Plan - Appendix

The OECD BEPS Action Plan Final Reports were only published on 5 October 2015, and many countries have changed or plan to change their tax legislation or administration in response.

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appendix

Below, we summarize actions taken so far by European countries in response to the 15 points of the OECD's BEPS Action Plan. Note that this information was the most current update available at the time of the release of the publications in our Taking the Pulse series. While we aim to update this page regularly, for the most up-to-date developments on BEPS generally, please refer to our BEPS TaxNewsFlash page. For the most up-to-date responses to Action 13 specifically, please visit the Action 13 country implementation summary page, which is updated weekly.

Action 1 - Address tax challenges of the digital economy

  • Bulgaria — New place-of-supply rules for business-to-consumer supplies of telecommunication, broadcasting and electronically supplied services; introduction of simplified registration regime.
  • Chile — Tax reforms adopted in 2014 empowered the Chilean Internal Revenue Service (IRS) to require taxpayers to report information about electronic gambling activities, digital commerce in any form, online applications and digital services. The Chilean IRS also instituted a Special Audit Unit to analyze technological systems.
  • Finland — The Finnish Tax Administration is running a project to address tax questions related to electronic commerce.
  • France — Greater scrutiny of digital companies; new requirements for segmented accounts. Tax searches have significantly increased in the last months, with the French tax authorities searching the mailboxes and documents of IT companies to see if there is a PE issue.
  • Greece — The VAT Directive regulating the treatment of digital services provided to customershas been domestically implemented since 2015; new regulations on taxation of onlinegambling games were introduced, taking effect 1 January 2016.
  • India — Union Budget 2016–17 proposed to introduce an equalization levy of 6 percent on online advertisement services rendered by non-resident companies that have no permanent establishment in India, with corresponding ‘treaty override’. Likely to raisedisputes and may be redrafted before enactment. Effective date to be notified.
  • Ireland — Changes in VAT place-of-supply measures for digital supplies and related mini one-stop-shop requirements have been implemented.
  • Italy — New rules to tax online transactions pending in Parliament, including new PE definition (which introduces ‘virtual PE’ concept) and withholding tax on digital goods and services supplied by non-residents.
  • Japan — Consumption tax for cross-border digital services introduced from October 2015.
  • New Zealand Non-resident suppliers of digital content (i.e. software, media) and services to New Zealand consumers will need to register for and pay goods and services tax from 1 October 2016.
  • Portugal  New legal framework for online gambling and betting.
  • Romania — New regulations on authorization and taxation of online gambling.
  • Russia — New VAT regulation for electronically supplied services.
  • Taiwan — Ongoing study of corporate income tax and valued added tax in the context of the digital economy.
  • USA — The Obama Administration has proposed a rule to currently tax foreign transactions involving digital goods or services.

Action 2 – Neutralize effects of hybrid mismatch arrangements

  • Australia — No immediate changes. The Board of Taxation will deliver a report to the Australian government in 2016 on whether to implement anti-hybrid rules. Any anti-hybrid laws resulting from this report are not expected to take effect until 2018.
  • Bulgaria — Anti-hybrid provisions aimed at eliminating possibilities for double non taxation introducedin 2016. Income from inbound dividends is not exempt from corporate income tax, whenthe distributed amounts are tax-deductible expenses and/or decrease the taxable resultof the distributing entity regardless of their accounting treatment at the level of thedistributing entity.
  • Chile  Although no specific anti-hybrid rules have been introduced, a general antiavoidance rule that can be used to challenge structures or transactions involving hybrid mismatches took effect in October 2015.
  • China — The SAT has informally indicated that anti-hybrid mismatch rules will be introduced in 2016.
  • Cyprus – Anti-hybrid provisions enacted for inbound dividends, denying equity treatement if a foreign-sourced dividend is deducted by the paying affiliate. 
  • Czech Republic — Czech Income Tax Act amended in 2016 to include limitation of tax exemption for so-calledhybrid loans, but, due to an inappropriate EU Directive implementation, the limitationcurrently applies only to dividends received from subsidiaries located outside the EU; thisshould be changed as of 1 January 2017.
  • Estonia — New legislation on corporate dividends, in effect as of November 2016, allows taxexemption on dividends received from a foreign entity only if the foreign entity has not had the right to deduct the dividend from its taxable income (e.g. as interest).
  • Finland – Anti-hybrid rule implemented in accordance with the amended Parent-Subsidiary Directive, effective 1 January 2016.
  • France – Existing rules limit opportunities for hybrid instruments, including rules aimed atdisallowing (i) participation exemption, if the amount of dividend has been deducted bythe subsidiary; and (ii) deductibility of interest, if the amount is not subject to a minimumtaxation at the foreign lender’s level.
  • Germany – Anti-hybrid rules in place (correspondence principle for dividends).
  • Hungary – A new anti-hybrid rule with effect from 2015 declares as a principle that any differences between the legal classification of legal relations that are affected by international treaties cannot result in double non-taxation; if they do, Hungary will includethe relevant income in the taxable base.
  • Ireland – Existing provisions limit opportunity for hybrid structures.
  • Italy – Anti-hybrid provisions already exist with respect to inbound dividends, denying equity treatment if a foreign-sourced dividend is deducted by the paying affiliate; Italy lacks a provision on hybrid entities. 
  • Japan — Foreign dividend exemption rule amended to comply with Action 2 as part of the 2015 tax reform.
  • Lithuania — General anti-avoidance provisions based on the amended EU Parent-Subsidiary Directive were implemented as of March 2016 for inbound and outbound dividends.
  • Luxembourg – Domestic law was amended to include an anti-hybrid rule in line with the EU Parent-Subsidiary Directive as of 2016.
  • Malta – Guidelines issued emphasizing that Maltese participation exemption does not apply to hybrid instruments in case of underlying debt; participation exemption system amended in line with EU Parent-Subsidiary Directive.
  • Mexico — Anti-hybrid and double deduction provisions have been introduced that limit deductions for interest, royalty and technical assistance payments that are not subject totax in the recipient country.
  • New Zealand — Some anti-hybrid measures are already in place (e.g. deductible foreign dividends are taxable; certain hybrid financial instruments are re-characterized as equity). A consultation document on Action 2 is expected to be issued in the second half of 2016.
  • Norway – Under changes to the exemption system, as of 1 January 2016, Norwegian shareholders are denied tax exemption where the foreign distributing company is entitled to a deduction for the distribution, typically because the payment is classified as interest in the distributor’s jurisdiction.
  • Poland – Rules on corporate dividends, introduced as of 2015, disallow participation exemption if the amount of dividend has been included in tax-deductible costs of an entity paying the dividend.
  • Portugal – Rules regarding dividends from foreign entities revised under 2014 reform.
  • Romania – Treaty benefits are denied for 'artificial cross-border transactions'; adjusted legislation to reflect the new provisions of the Parent-Subsidiary Directive.
  • Slovakia — Received dividends are generally not taxable, but if tax deductible in the paying country, they become taxable in Slovakia. Dividends may become taxable if they are received as a result of artificial arrangements.
  • Spain – Anti-hybrid legislation in force from 1 January 2015
  • Sweden — Introducing anti-hybrid rules in line with the latest amendments to the Parent–Subsidiary Directive
  • Switzerland – Current tax rules (introduced about 2 decades ago) do not allow Swiss parent companies to use hybrid structures with their immediate subsidiaries.
  • Taiwan — The OECD recommendations are being implemented in treaty negotiations.
  • United Kingdom – Draft legislation has been published, and the new rules will apply to payments made on or after 1 January 2017.
  • USA — The Obama Administration has proposed a rule that would deny deductions for related-party interest and royalty payments in certain situations involving hybrid arrangements and to currently tax some payments received by US-owned foreign reverse hybrid entities.

Action 3 – Strengthen CFC rules

  • Brazil — Brazil already has one of the world’s most stringent CFC regimes, and these rules further strengthened in 2014.
  • Chile — CFC legislation was introduced in 2014 and applies from 2016 onward. The new rules generally meet the strengthened standards recommended by the OECD.
  • China — China’s BEPS-aligned controlled foreign company rule will be clarified via a circular on special tax adjustments expected to be finalized in 2016.
  • Costa Rica — Proposed legislation would tax extraterritorial passive income on repatriation.
  • Czech Republic — No CFC legislation currently; CFC legislation is expected to be implemented as of 1 January 2019 as a result of the ATA Directive.
  • Finland – The Audit Committee is running a project to develop means to prevent international tax avoidance overall; whether this will affect the Finnish CFC legislation is unknown.
  • France – CFC legislation in force.
  • Germany – CFC legislation in force, some adjustments expected due to the EU ATA Directive.
  • Greece – CFC rules apply from 2014 onwards.
  • Iceland – CFC legislation introduced in 2010.
  • India — Controlled foreign company rules were introduced indirectly by incorporating the concept of ‘passive income’ for determining place of effective management (POEM), for purposes of tax residency of foreign companies in India, with effect from FY2016–17. The Indian Revenue Board issued draft POEM guidelines in December 2015. Final guidelines are not yet released.
  • Ireland — No CFC legislation currently; CFC rules are expected to be introduced by 1 January 2019 in line with the EU ATA Directive.
  • Italy – Existing rules were amended twice in 2015, and seem substantially compliant with Action 3. 
  • Korea — Introduced controlled foreign company rules on passive income.
  • Poland – CFC rules introduced from 2015.
  • Portugal – CFC rules in force.
  • Romania — Introduction of CFC rules currently considered.
  • Russia – CFC rules further developed in 2016; blacklist of tax haven jurisdictions published.
  • Spain – CFC rules recently strengthened.
  • Sweden – CFC legislation in force.
  • Taiwan — Previously proposed controlled foreign company rules are being revisited.
  • Thailand — Introduction of controlled foreign company rules under consideration.
  • Turkey – CFC legislation introduced in 2006 and currently in force.
  • United Kingdom – CFC rules in force; new rules were introduced in 2013, and no further substantive changes are expected.
  • United States — An Obama Administration proposal would impose a 19 percent minimum tax on certain foreign income of CFCs.

 

Action 4 – Limit base erosion via interest deductions and other financial payments

  • Austria – Restrictions on deductions introduced.
  • Australia — The Australian thin capitalization thresholds were tightened from a 75 percent gearing ratio to a 60 percent gearing ratio for income years beginning on or after 1 July 2014.
  • Belgium – Thin capitalization rules strengthened.
  • Brazil — Brazil already has thin capitalization rules, transfer pricing rules, deduction restrictions to payments to tax havens and other measures to fight base erosion via interest deductions and other financial payments.
  • Chile — Thin capitalization rules were enhanced as of 2015. Stricter provisions for interest deductibility are in force from 2014, along with deductibility requirements for related-party payments.
  • Costa Rica — Proposed legislation sets out 2:1 thin capitalization rules. Withholding tax exemptions for foreign lenders have been virtually eliminated.
  • Czech Republic – Higher withholding rate imposed on Czech source dividends, interest and royalty paid to countries with which the Czech Republic does not have tax treaty, information exchange agreement or convention on mutual administrative assistance in tax matters; draft bill released to limit the tax-exempt status of dividends where the corresponding payment is deductible for the payer (refers to EU Directives 2015/121 and 2014/86).
  • Finland – Limits on deductibility of interest apply from 2014.
  • France – Thin capitalization rules strengthened; interest deductibility limited where beneficiary is subject to low taxation.
  • Greece – Stricter provisions for deductibility from 2014 onwards.
  • Hungary – As of 2012, a more restrictive dividend definition was introduced to domestic law to tackle deduction/non-inclusion; under the rule, dividend income is tax-deductible only if the payer did not deduct it from its pretax profit.
  • Italy – Existing restrictions on interest deduction have undergone preliminary review and will be reviewed further.
  • Japan — Introduction of an earnings-stripping regime to prevent companies from taking excess interest deduction in 2012 (not directly linked to BEPS).
  • Malaysia — Introduction of thin capitalization rules as of 1 January 2018.
  • Mexico — Deductions for interest, royalty and technical assistance payments are disallowed where the payments are not subject to tax in the recipient country.
  • New Zealand — Legislation is expected in 2016 to strengthen and broaden existing withholding tax rules (i.e. to apply withholding tax in more circumstances and to payments meeting a wider definition of ‘interest’). Consultation on interest deductibility is expected in the second half of 2016.
  • Norway – In December 2014, a commission on international tax reform recommended a further tightening of the rules limiting interest deductibility and the introduction of withholding tax on interest and royalty.
  • Panama — Financing among related parties is subject to transfer pricing regulations.  Moreover, back-to-back loans are permitted but interest deduction is limited to the spread.
  • Poland – Tightening thin capitalization regime.
  • Portugal – Earnings stripping rules introduced in 2013, limiting interest deductibility, tightened under 2014 reform; increased scrutiny of transfer pricing practices.
  • Romania – Tightening thin capitalization rules.
  • Russia – Extended thin capitalization rules are being drafted; fixed limits on interest deductibility are abolished; current limits are in line with transfer pricing rules.
  • Slovakia – Earning stripping rules implemented with effect from 1 January 2015 effectively limit interest deduction on related-party loans
  • Spain – Stricter interest deductions rules in force from 1 January 2015.
  • Sweden – Strict interest deduction rules introduced in 2013 deny deduction of intragroup interest cost; the Swedish Tax Agency is scrutinizing intra-group restructurings and stepping up audit activity in this area.
  • Taiwan — Introduced thin capitalization rules in 2011 (not directly linked to BEPS).
  • Thailand — Introduction of thin capitalization rules under consideration.
  • Vietnam — Introduction of thin capitalization rules under consideration.
  • United States — The Obama Administration has proposed a rule to limit the deductibility of interest expense based on the ratio of the leverage of a multinational group’s US operations to that of its worldwide operations.

Action 5 – Counter harmful tax practices more effectively, taking into account transparency and substance

  • Australia  Multinational anti-avoidance law (de facto diverted profits tax) legislated with effect for income years beginning on or after 1 January 2016.
  • Canada  Canada has joined the Multilateral Competent Authority Agreement, which implements the Standard for Automatic Exchange of Financial Information in Tax Matters.
  • Chile — General anti-avoidance rules (based on the substance-over-form principle) entered into force in 2015, and the definition of ‘preferential tax regime’ has been broadened.
  • China — The tax incentive for high and new technology was modified to allay concerns raised by other countries during the BEPS process.
  • Finland – Tighter scrutiny of transfer pricing practices and to taxation of carried interest structures.
  • France – Substance under scrutiny.
  • Greece – Tax authority requirements for transfer pricing tightened and tax avoidance rules introduced in 2014.
  • Hong Kong — Introduced measures to enact a Corporate Treasury Centre regime; Action 5 specifically referenced during the legislative process.
  • India — Union Budget 2016–17 proposed to introduce a patent box regime, offering a 10 percent tax rate for royalties earned from licensing patents developed and registered in India.
  • Ireland – Announced plans to introduce a patent box (‘Knowledge Development Box’ – KDB) in early 2015 and outlined a proposed framework for the KDB in a July 2015 Feedback Statement based on consultations held in 2015; legislation to implement the KDB (in line with the OECD's modified nexus approach) will be announced in Ireland's Budget 2016 on 13 October 2015, with effect from 1 January 2016.
  • Italy – Anti-avoidance provision replaced with a new definition of ‘abuse of law’ and unified concepts of ‘abuse of law’ and ‘tax avoidance’. Restrictions to deduct costs from tax havens partly replaced by arm's-length also for uncovered transactions.
  • Korea — A substance-over-form rule allows the tax authority to re-characterize a related party transaction based on its substance where the tax burden of a company has beenunjustly reduced.
  • Luxembourg – IP regime to be modified to take into account the OECD work (modified nexus approach).
  • Malta – General anti-abuse rules under domestic law deny tax benefits where a transaction’s purpose is to avoid Maltese taxes.
  • New Zealand — New Zealand has committed to implementing automatic exchange of (financial account) information from 1 July 2017 and will start automatically exchanging unilateral tax rulings with treaty-partner countries in 2016.
  • Norway – In December 2014, a commission on international tax reform recommended (among others) incorporating current administrative anti-abuse rules into Norwegian tax law and expanding taxpayers’ disclosure of ownership in foreign companies.
  • Panama - Regulations were enacted in 2015 to develop the concept of substance upon the request of tax residence certificates.
  • Poland – Draft amendments introduced to add an anti-avoidance clause to the Polish participation exemption with effect from 1 January 2016).
  • Portugal – Increased scrutiny of transfer pricing practices.
  • Romania – Under general anti-abuse provisions, ‘artificial transactions’ can be disregarded or adjusted for tax purposes.
  • Russia – Convention and protocol on Mutual Administrative Assistance in Tax Matters entered into force in respect of Russia as of June 2015; committed to start first automatic exchange of information in 2018.
  • Slovakia – Substance-over-form principle broadened.
  • Spain – Substance-over-form approach strengthened (through modifications to the GAARs in the General Tax Law).
  • Turkey – Substance-over-form principle is already accepted by Turkey.
  • United Kingdom – Put forward a proposal to the OECD Forum on Harmful Tax Practices to accept the OECD’s Nexus approach in relation to its patent box regime; a new patent box regime is expected to come into force from June 2016, operating in parallel with the current patent box regime, which is to be grandfathered until June 2021.
  • United States — There is a legislative proposal for a regime that would provide incentives for intangible property.

Action 6 – Prevent treaty abuse

  • Australia — BEPS treaty anti-abuse rules are included in the new Australia-Germany treaty (signed in November 2015).
  • Brazil — Limitation on benefits provisions are included in the most recent tax treaties executed by Brazil.
  • Bulgaria – Some tax treaties are being renegotiated to include explicit limitation on benefits clauses.
  • Chile — Administrative instructions define the scope of ‘beneficial owner’. New tax treaties under negotiation include explicit limitation on benefit clauses, anti-treaty shopping clauses and a principal purpose test.
  • China — BEPS treaty anti-abuse rules are included in the new Chile-China treaty (signed May 2015). Treaty relief administration procedures in China were reformed in November2015 to facilitate application of new treaty anti-abuse approaches.
  • Costa Rica — The government has been reluctant to negotiate new treaties. The country has only one treaty in effect, while two others have been submitted for legislative approval.
  • Finland – The Finnish Tax Administration is running a project that aims to promote Finland’s international cooperation.
  • France – Anti-treaty shopping clause in new tax treaties.
  • Germany – New German model tax treaty contains switch-over and subject-to-tax rules as well as specific anti-avoidance rules.
  • Hungary – A new GAAR aims to deny tax exemption on income not taxable in any of the countries under a tax treaty due to different interpretation of the facts and/or the treaty itself, allowing the tax authority to bypass the normal mutual agreement procedure in such cases and proceed directly to deny the exemption.
  • India — Introduced or expanded limitation on benefits concept in recent tax treaties.
  • Italy – Existing rules to be reviewed.
  • Japan — Some tax treaties include limitation on benefits clauses.
  • Korea — In recent treaty negotiations, Korea has worked to introduce limitation on benefits clauses.
  • Mongolia — Cancellation of certain treaties due to abuse.
  • New Zealand — Newer tax treaties contain limitations on benefits provisions, but none to date explicitly follow the OECD recommendations. New Zealand’s treaty with Australiamay be a test case as it is due for review by both countries. New Zealand will be involved in OECD multilateral instrument discussions and negotiations.
  • Panama — A new regulation has been adopted regarding the proper application of treaty benefits.
  • Papua New Guinea — New treaty negotiations are suspended; the government willwait to see what actions other countries are taking on treaties before re-commencingnegotiations.
  • Poland – Reviewing and amending tax treaties.
  • Romania – Increased withholding tax of 50 percent for payments to companies resident in non-treaty countries in relation to artificial transactions; renewing existing treaties to add information exchange and administrative cooperation clauses.
  • Russia – Establishing beneficial ownership concept in the Russian Tax Code; taxation of indirect sales of Russian real estate.
  • Slovakia – White list of treaty states established; withholding and security taxes significantly increased on payments to non-treaty countries; payments to non-treaty countries deductible only after the required withholding, settlement and notification to tax authorities are complete.
  • Sweden – Swedish government has been increasing the number of Swedish tax treaties in the past few years and is seeking to include tax information exchange clauses.
  • Switzerland – For over 50 years, Switzerland has had legislation in place to unilaterally inhibit the misuse of treaty benefits.
  • Taiwan — The OECD recommendations are under study and being considered in current treaty negotiations.
  • Turkey – Renewing existing treaties by adding information exchange and administrative cooperation clauses.
  • United States — The Obama Administration has proposed revisions to the US model treaty that include, among other things, draft provisions addressing issues arising from ‘special tax regimes’.

Action 7 – Prevent artificial avoidance of permanent establishment status

  • Canada Since 2013, Canada has been evaluating measures to combat treaty shopping
  • Chile — No legislation to date. However, the ‘permanent establishment’ definition in Chile’s tax treaties is typically broader than the OECD model definition and the exception for preparatory and auxiliary activities is narrower.
  • China — Among various measures, BEPS permanent establishment concepts are included in the new Chile-China treaty (signed May 2015); new permanent establishment recognition/profit attribution guidance is anticipated in the second half of 2016: and the SAT has clarified that some aspects of BEPS permanent establishment concepts may be applied by Chinese tax authorities under existing guidance on permanent establishment recognition.
  • Estonia – New regulations expected ahead of OECD.
  • Greece – Existing PE laws remain strict.
  • Italy – Voluntary disclosure extended to, among others, non-residents that failed to report income from a PE.
  • New Zealand — To date, no New Zealand tax treaties explicitly follow the OECD recommendations. New Zealand’s treaty with Australia may be a test case as it is due for review by both countries. New Zealand will be involved in OECD multilateral instrumentdiscussions and negotiations.
  • Poland – Intention to put more emphasis on tax audits of entities doing business in Poland through unregistered PEs
  • Portugal – Increased scrutiny of transfer pricing practices
  • Spain – In practice, Spain’s tax authority already broadens the definition of PE and applies a more economic concept.
  • Sweden – New registration rules for foreign employees present in Sweden have increased the Swedish Tax Agency’s interest in determining whether these employees' activities trigger PE status for their employer.
  • Taiwan — The OECD recommendations are under study and being considered in current treaty negotiations.
  • Turkey – More audit scrutiny is being devoted to PE issues
  • United Kingdom – New ‘Diverted Profits Tax’ (at a rate of 25 percent, rather than the current 20 percent for corporation tax) introduced from 1 April 2015 to counter perceived contrived arrangements to divert profits from the UK.
  • Vietnam — The domestic ‘permanent establishment’ definition is more aggressive than the OECD BEPS proposed policy.

Actions 8, 9, 10 – Ensure transfer pricing outcomes are in line with value creation

Action 8 – intangibles, Action 9 – risks and capital, Action 10 – other high-risk transactions

  • Australia — Multinational anti-avoidance law (de facto diverted profits tax) legislated with effect for income years beginning on or after 1 January 2016.
  • Austria   New rules on transfer pricing likely Belgium – More scrutiny of transfer pricing.
  • Canada KPMG in Canada has seen cases in which the Canada Revenue Agency has applied the OECD’s recommended principles in transfer pricing audits.
  • Chile — Transfer pricing is under more scrutiny, and the scope of Chile’s business restructuring rule has been broadened.
  • China — BEPS transfer pricing guidance will be substantially incorporated into Chinese transfer pricing guidance (with significant ‘localization’) via a circular on special tax adjustments to be finalized in 2016.
  • Czech Republic —  Increased scrutiny of transfer prices.
  • Finland – Finland’s government is studying risks and is expected to implement a domestic APA procedure.
  • France  Increased tax audits and greater scrutiny of transfer prices.
  • Iceland   Transfer pricing regulations introduced with effect from 1 January 2014.
  • India — The Indian revenue authority deviates from the OECD’s position on location savings. India views such savings as an intangible that would result in extra profit and thusshould be attributed on related-party transactions. When planning for the cross-charge for services that involve intangibles, international companies need to ensure that transferpricing outcomes are in line with value creation.
  • Italy   Transfer pricing documentation disclosure allows taxpayer to be released from any assessed penalties; a decree on international tax matters approved in August 2015 clarifies that the arm's-length standard does not apply to domestic transactions; a proposed bill provides that no criminal penalties should apply in the case of transfer pricing adjustments.
  • Lithuania – Increase in transfer pricing audits, with special focus on related-party loans, management services and royalties.
  • Luxembourg – More detailed transfer pricing rules are contemplated.
  • Malaysia — Transfer pricing guidelines in place. Malaysia tends to adopt OECD guidelineswhen finalized. Additional measures were introduced in 2015 to tighten transfer pricingcompliance.
  • Mexico — A new transfer pricing group has been formed with the tax authority in order to increase scrutiny of transfer prices.
  • New Zealand — No unilateral action to date. New Zealand will be involved in OECD Working Party work on transfer pricing recommendations.
  • Peru — Tax audits addressing application of arm’s length principle are increasing. Peru’s tax laws expressly regard the OECD’s transfer pricing guidelines as an authoritative source of interpretation.
  • Poland —  Plan to introduce extended transfer pricing reporting requirements, including local benchmarking studies.
  • Portugal – Increased scrutiny of transfer pricing practices.
  • Romania – Increased scrutiny of transfer pricing and proposed tightening of transfer pricing reporting requirements.
  • Singapore — In early 2015, the Inland Revenue Authority of Singapore adopted many ofthe BEPS Action Plan items relating to transfer pricing.
  • Slovakia – Rules amended to broaden scope of transfer pricing rules to also cover domestic transactions.
  • Spain – The Spanish Tax Administration follows the OECD approach in this respect.
  • Sri Lanka — Measures implemented to enforce transfer pricing as of the 2015/16 fiscal year.
  • Taiwan — Transfer pricing assessment rules are expected to be updated in 2016.
  • Thailand — Transfer pricing rules are expected to be enacted late 2016.
  • Vietnam — Revisions to the transfer pricing regulations, potentially in line with BEPS, are being considered. The timeline for such regulatory changes is unclear.
  • The Netherlands —  New transfer pricing decree introduced.
  • Turkey — Increased transfer pricing audits.

 

Action 11 – Establish methodologies to collect and analyze data on BEPS and the actions to address it

  • Australia Recently passed laws to improve the transparency of the Australian corporate tax system require the Australian Taxation Office to publish tax-related information of large corporate taxpayers, with effect from the 2013–2014 income year.Information disclosed includes name and Australian business number of the entity; total income and taxable income for the income year; and income tax payable for the income year after applying available tax offsets.
  • Chile — New rules require large corporate taxpayers to file an annual information return on the ‘global tax characterization’ of their operations, with the first returns due in 2016 for calendar year 2015.
  • Costa Rica — The Tax Code has been modified to give the tax administration more powers to collect data.

Action 12 – Require taxpayers to disclose their aggressive tax planning arrangements

  • Belgium – Mandatory disclosure of tax haven payments
  • Brazil — No action to date. A proposal to require taxpayers to formally report to the Brazilian tax authorities transactions that result in a tax benefit proved highly controversial, and it did not pass before the Brazilian Congress
  • Chile — A voluntary disclosure mechanism allows for a determination that a particular tax plan is not abusive under Chile’s new GAAR provisions. Corporate taxpayers will be required to inform the Chilean IRS, through a sworn statement of the amounts, types and the destination of the investments performed abroad and in Chile
  • Germany – Disclosure rule for aggressive tax planning structures under discussion but not yet proposed
  • Mexico — Taxpayers are obliged to file a ‘Relevant Transactions’ information return to report information about tax planning that the tax authorities might consider aggressive.
  • Poland – Plan to introduce a new ruling procedure that would guarantee that a particular tax plan is not abusive; extended reporting requirements to include information on restructurings undertaken
  • Portugal – Disclosure provisions introduced in 2008 and subsequently refined
  • Russia – New rules oblige Russian taxpayers to disclose participations in foreign companies (including trusts, funds, foundations); foreign companies that hold Russiansitus immovable property must submit data about their chain of owners (up to 5 percent of indirect ownership)
  • Turkey – Companies registered with the Large Corporation Tax Office are required to prepare transfer pricing reports by April of fiscal year and submit them upon request; tax haven list prepared but not yet approved

Action 13 - Re-examine transfer pricing documentation

For the most up-to-date list of country responses to Action 13, please visit the Action 13 country implementation summary page, which is updated weekly.

Action 14 – Make dispute resolution mechanisms more effective

  • New Zealand — New Zealand will be involved in OECD multilateral instrument discussions and negotiations. Note that New Zealand was prepared to commit to the mutual agreement procedure.
  • Romania – Changes to procedures for APAs and advance tax rulings, as of 2016.
  • Sweden – The advance tax ruling procedure is under review.
  • Taiwan — Draft mutual agreement procedures guidelines are expected to be issued in 2016.

Action 15 – Develop a multilateral instrument

  • Canada Canada is taking part in the ad hoc group that is developing the multilateral instrument.
  • New Zealand — New Zealand will be involved in OECD multilateral instrument discussions and negotiations.
  • United Kingdom – The UK is a member of the ad hoc group that is developing the multilateral instrument on tax treaty measures to tackle BEPS.
  • United States The US is taking part in the ad hoc group that is developing the multilateral instrument.

 

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