BEPS Action plan 13 in the light of confidentiality
Abstract: OECD introduced 15 Action plans as part of the BEPS-project in 2014 in their work to combat base erosion and profit shifting (BEPS). Action plan 13 provides for a re-examined transfer pricing documentation and a new Country-by-country-reporting. The CbC-reporting is to be included in a three-tired approach including a master-file and a local-file. This thesis will focus on Action plan 13 in the light of confidentiality. The background to the CbC-reporting will be presented for, but the focus will be on the criteria of confidentiality and the current discussion on whether the reports should be made available to the public.
The purpose of Action plan 13 and the CbC-reporting is to increase transparency and facilitate for the tax authorities in their exchange of information. All MNEs with annual consolidated group revenue equal to or exceeding 750 million Euros have to report the relevant information to all relevant governments. This has to be made through a three-tired approach, namely, a local-file, master-file and a CbC-reporting.
One of the conditions that the Member states implementing the CbC-reporting have to follow is confidentiality. It is up to the domestic jurisdictions themselves to provide for provisions concerning the protection of sensitive information. Through out their work, the OECD is advocating confidentiality and the protection of the taxpayer. On the other hand, there are, mainly NGOs that are proposing a public CbC-reporting, which would lead to the reports being publicly disclosed. The main argument for publicly disclosing the CbC-reports is to increase transparency. It has been argued that without a public CbC-reporting it is not possible to fulfil the aim of Action plan 13 at all.
Action plan 13 can be seen as an appropriate tool to combat BEPS. That is to say if the benefits exceed the costs. At the moment there are not strong enough reasons as to why the CbC-reports should be made public and would therefore go further than the actual purpose of Action plan 13. In other words, the tax authorities are the only ones to whom the information should be made available. At the moment the Member states have agreed, after implementation of CbC-reporting, to provide for provisions on confidentiality in the domestic law. On the other hand, with the EU and mainly the European Commission, advocating public CbC-reporting, we might see a change in the near future, since they can decided to go further than the OECD. The 2020 review on the BEPS project will tell how Action plan 13 is working as a tool to combat BEPS and also possibly bring up the discussion on the potential public CbC-reporting.
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