PH joins OECD committee on fiscal affairs by Jan 2015

Rappler.com

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PH joins OECD committee on fiscal affairs by Jan 2015
The inclusion is seen to aid the country in its fight against base erosion and profit sharing by some multinational firms

MANILA, Philippines – Starting January 2015, the Philippines will be part of the Organization for Economic Cooperation and Development’s (OECD) Committee on Fiscal Affairs (CFA), joining the global effort of both developed and developing economies to address troubling trends in unfair and unjust tax avoidance and evasion.

CFA is the steering, standard-setting, and decision-making body of the OECD. The Philippines will use its OECD-CFA seat to present developing country perspectives and priorities, including shaping strategies, tools, and other outputs to curb the global base erosion and profit shifting (BEPS).

According to the OECD, BEPS by multinational enterprises is a “global problem which requires global solutions.”

BEPS artificially erodes the tax base by shifting profits to low or no-tax locations, where little to no economic activity and value creation has taken place.

While most tax planning resulting in BEPS is legal, the double non-taxation from it distorts competition and investment decisions. Developing countries are seen at a disadvantage in this as they expect revenues from corporate income taxes when multinationals make profits in their respective jurisdictions.

Bureau of Internal Revenue (BIR) commissioner Kim Henares, who has been recently appointed as the United Nations international tax expert, welcomed the OECD-CFA membership and said in a statement, “we look forward to developing international tools to combat base erosion and profit shifting. Together, we can address a fundamentally unfair practice where multinationals make a huge profit in countries they pay little to no taxes to.”

Henares added that they expect these corporations to at least contribute to building and developing the nations they made huge profits from.

In the International Tax Forum that concluded on Friday, November 14, Henares said that living in an increasingly globalized world requires governments to adapt and update tax policy and enforcement strategies.

“International cooperation is key if we want to raise sustainable amounts of revenues to continue funding growth and investments to our people and country,” Henares stressed.

Apart from the OECD-CFA seat, the Philippines has also been invited to the 1st BEPS Technical Meeting for Partner Countries on December 10 to 11, 2014 in Paris, France.

Australia to assist PH in fight versus tax cheats

In the Group of Twenty (G20) Leaders Summit that concluded Saturday, November 16 in Brisbane, the participants welcomed OECD recommendations in restoring fairness, integrity, and transparency to the international tax system.

The G20 is also on track to deliver on the 2-year BEPS action plan to address tax avoidance, with all actions scheduled to be delivered this year.

All G20 and OECD members, representing 44 countries and around 90% of the world economy, have also endorsed a new global transparency standard. With this, more than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard by 2017 or 2018.

The G20 is also working with low-income and other developing countries to ensure they are involved with and benefit from the G20’s tax agenda. For instance, Australia will assist the Philippines to implement the automatic exchange of tax information as part of the fight against tax cheats.

Also, 38 tax authorities formally committed to increasing their collaboration to complement the BEPS policy reforms.

The OECD initiative plans to roll out outputs by September 2015 and unveil the multilateral instrument sometime in December 2015.

Leadership by the G20 on this important issue already has an immediate effect. The OECD estimates that information exchange arrangements have already yielded $46.50 billion dollars of revenue in around 20 OECD and G20 countries through increased voluntary disclosures by taxpayers. – Rappler.com

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