Earlier this month, against a backdrop of slow economic growth and increased attention to international corporate tax practices, executives from a range of global companies met in Washington, D.C. with tax experts from the OECD and member governments at the 2013 OECD International Tax Conference. Now in its eighth year, the sold-out event was organized by USCIB in cooperation with the 34-nation OECD, which is the leading global forum for discussion of international tax policies.
The June 3-4 conference focused on the challenge of adapting longstanding international tax principles to the modern economy. At their summit in Mexico last year, G20 leaders explicitly referred to “the need to prevent base erosion and profit shifting,” or BEPS. G20 finance ministers subsequently asked the OECD to report on this issue by their meeting last February. The OECD report and follow-on action were high on the agenda at this year’s conference.
Pascal Saint-Amans, director of OECD Center for Tax Policy and Administration, led a discussion BEPS. Participants included Robert Stack, deputy assistant secretary for international tax affairs at the U.S. Treasury; Mike William, director of business and international taxation with Her Majesty’s Treasury in the U.K.; Brian Ernewein, general director of tax policy with Finance Canada; and Will Morris, chair of the BIAC committee on Taxation and Fiscal Affairs.
The panelists acknowledged that there are problems with present system, but they cautioned that current rules have worked well for decades, and adverse impacts must be carefully considered. Stack said that “respecting legal entities and contracts is critical to the functioning of the transfer pricing rules, which have worked reasonably well in a very large majority of situations.”
Michael Danilack, deputy commissioner at the Internal Revenue Service, provided keynote remarks on recent developments in the OECD’s Forum on Tax Administration, which promotes dialogue between tax administrations and identifies good tax administration practices. Click here to read his remarks.
Several panels addressed issues relating to transfer pricing, including a panel led by Joe Andrus, head of the OECD’s transfer pricing unit. Business is very concerned about proposed changes to the OECD’s transfer pricing guidelines on intangibles. The issue of entitlement to intangible-related returns is particularly difficult, especially the notion of financial investment.
Andrus said the OECD believes that financial investment in intangibles is important, and continues to wrestle with this issue. He also indicated that financial investment will be dealt with differently in the next version of the discussion draft.
The conference was co-organized by USCIB, the OECD and the Business and Industry Advisory Committee (BIAC) to the OECD, which officially represents the view of industry in the Paris-based body, and for which USCIB serves as the U.S. member federation. Supporting organizations include the International Fiscal Association, Tax Foundation, National Foreign Trade Council, Organization for International Investment, Tax Council Policy Institute, International Tax Policy Forum and Tax Executives Institute.
“Governments need clear, consistent rules to collect an appropriate amount of tax from multinational enterprises doing business in their jurisdictions,” said Carol Doran Klein, USCIB’s vice president for tax policy. “Businesses need clear and consistent rules to foster trade and investment across borders. Developing these rules requires dialogue among countries and business. The conference was an important part of that dialogue.”
Staff contact: Carol Doran Klein