The International Chamber of Commerce (ICC) recognizes the efforts of an increasing number of tax authorities to revise their tax policies in response to the international guidelines outlined in the G20 mandated Organisation for Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS) project. ICC urges national governments to seriously consider the broader implications of their proposed measures and strongly recommends an alignment with existing guidelines that would facilitate greater consistency internationally and incentivise cross-border trade, investment and economic growth.
The global focus on creating a fairer and more transparent international tax system has resulted in many jurisdictions implementing measures at a local level in an effort to address offshore tax avoidance. In some cases these measures go beyond the proposals set out in the BEPS recommendations. While it is entirely within the prerogative of national governments to decide on their policies, ICC reiterates the need for coherent and co-ordinated implementation of the internationally agreed guidelines across all countries and in close cooperation with business, in order to align tax systems, protect government revenues and safe-guard cross-border trade and investment.
Christian Kaeser, Chair of the ICC Commission on Taxation and Global Head of Tax at Siemens AG, said: "For the business community, the integrity of the international tax system is of critical importance. In order to establish a level playing field, implementation of the OECD BEPS recommendations would need to be consistent across global markets. Unilateral disparate tax rules will introduce double or multiple standards that not only create compliance challenges for business but essentially undermine the consistency of the international tax system."
Unilateral disparate tax rules will introduce double or multiple standards that not only create compliance challenges for business but essentially undermine the consistency of the international tax system.
ICC has already cautioned against measures proposed in the European Commission's Anti-Tax Avoidance Package including provisions for public disclosure of tax data which fall well beyond the scope of international guidelines and remains concerned that a number of other countries seem to be following in the same vein.
Notably, India has recently adopted into law an equalization levy that would be imposed on the payments for digital transactions, and not income, and therefore not fall under the scope of existing tax treaties, giving rise to potential instances of double taxation. Furthermore the Chinese State Administration of Taxation has implemented an initiative to collect financial data from the top 1,000 companies in China using their own software that could pose confidentiality and data security concerns. The US has also recently proposed regulations on debt and equity which would, if they were adopted, override the agreements between the OECD and G20 countries regarding the treatment of interest deductions.
Some of the measures being implemented at national level do not impact local business in isolation, but have broader consequences internationally. ICC encourages national governments to consider the inter-connected dynamics that help facilitate global trade when developing their local policies. Deviations from internationally-agreed guidelines create tax barriers and ultimately undermine global efforts to establish a consistent international tax landscape. ICC therefore reiterates the importance of coordinated implementation of the combined deliverables of the G20/BEPS project on a multilateral basis with a consensus approach in order for the solutions to be consistent and uniformly applied at the international level.