Submissions made by this Institute as a member of CCAB-I in recent weeks cover Controlled Foreign Company rules, monitoring of results of BEPS measures, and the mandatory disclosure of tax planning arrangements.

Action 3 – Strengthening Controlled Foreign Company (CFC) Rules

This Public Discussion Draft identifies building blocks towards coherent CFC regimes. An overriding concern highlighted in the submission and identified in the draft is that inappropriate CFC rules will lead to double taxation. CFC rules are not intended per se to raise revenues, but rather to act as a deterrent to egregious relocation for profit shifting purposes.

The submission response focused on two areas: practical problems with the three proposals in the draft and current administrative/practical difficulties in respect of double tax relief rules.

Action 11 – Improving the Analysis of BEPS

This action seeks to develop recommendations regarding indicators of the scale and economic impact of BEPS and ensure that tools are available to monitor and evaluate the effectiveness and economic impact of the actions taken to address BEPS on an ongoing basis.

The Public Discussion Draft proposes a ‘dashboard’ of indicators that may give broad insights into BEPS and especially changes in BEPS over time. Seven indicators were identified which might make up the dashboard. The submission reiterates the difficulty with indicators is to filter out factors which alter the trends, but which are not related to BEPS project initiatives. 3 particular proposed indicators were examined and a potential additional indicator highlighted.

The submission also stressed the importance of ensuring that no additional reporting obligations or information collection requirements should be imposed as a result of Action 11. The confidentiality of information held by tax authorities is also a concern.

Whatever methodology is used, there has to be consistency by way of international agreement on the method. The final indicators arrived at should be fit for purpose but equally these should be user friendly and not open to misinterpretation.

The OECD subsequently released public comments received in relation to Action 11 of the BEPS Action Plan. To view all comments see the OECD website.

Action 12 – Mandatory Disclosure Rules

Chartered Accountants Ireland liaised with ten other professional accountancy bodies in the Global Accounting Alliance to make a submission on this issue. The Global Accounting Alliance represents nearly 800,000 qualified accountants in over 180 countries around the world. The OECD has since released public comments received in relation to this action.

The submission relied heavily on experiences of the Disclosure of Tax Avoidance Schemes in the UK and Mandatory Disclosure in Ireland with particular reference to compliance burdens and costs. The inequity that legal professional privilege imposes on accountants making reporting requirements also featured.

The OECD subsequently released public comments received in relation to Action 12 of the BEPS Action Plan. This included the comments made by Chartered Accountants Ireland as part of the Global Accounting Alliance.

To view all comments see the OECD website.

Discussion draft on Action 7

The OECD invites comments on a recently issued discussion draft on Action 7 of the BEPS Action Plan. Action 7 seeks to develop changes to the definition of permanent establishment (PE) to prevent the artificial avoidance of PE status in relation to BEPS, including through the use of commissionaire arrangements and the specific activity exemptions. Comments should be submitted no later than 12 June 2015.

Discussion draft on Action 6

The OECD released a revised discussion draft inviting commentary on Action 6 of the BEPS Action Plan. Action 6 seeks to prevent the granting of treaty benefits in inappropriate circumstances. Chartered Accountants Ireland, as a member of CCAB-I, previously submitted commentary on the initial Action 6 discussion draft.

Comments should be submitted no later than 17 June 2015.