10/05/2012 – The OECD’s Task Force on Tax and Development, meeting in Cape Town, South Africa, has launched the concept of Tax Inspectors Without Borders/ Inspecteurs des impôts sans frontières – a new initiative to help developing countries bolster their domestic revenues by making their tax systems fairer and more effective. Building on that concept, the OECD will establish an independent foundation, to be up and running by the end of 2013, that will provide international auditing expertise and advice to help developing countries better address tax base erosion, including tax evasion and avoidance. The initiative was championed by Oupa Magashula, Commissioner General of the South Africa Revenue Service, Nhlanhla Nene, South Africa’s Deputy Finance Minister and Pascal Saint-Amans, Director the OECD’s Centre for Tax Policy and Administration.
The stakeholders from business, civil society, as well as OECD and developing country governments attending the Tax and Development Task Force unanimously welcomed the initiative which fills a gap in the existing provision of audit assistance. They agreed to work together to launch a sustainably financed independent organisation to host a Tax Inspectors Without Borders secretariat by the end of next year. This initiative complements several efforts by donor agencies, notably USAID, to mobilise expertise.
The average tax burden on earnings in OECD countries continues to rise
Published in OECD Tax News – 25/04/2012
25/04/012 – The average tax and social security burden on employment incomes increased in 26 out of 34 OECD countries in 2011 according to the new OECD Taxing Wages publication. Tax payers in Ireland, Luxembourg, Portugal and the Slovak Republic were among those hit with the largest increases. Those in New Zealand and the United States saw their tax burden fall. In Hungary, the average single worker without children was faced with the largest increase in the tax wedge, but for families with children, it fell.
In most countries the higher overall tax burden was due to personal income tax, rather than increased Social Security Contributions. Only 5 countries raised their statutory tax rates on average earnings. In most cases the rise in the tax burden was due to a higher proportion of earnings being subject to tax because the value of tax free allowances and tax credits fell relative to earnings. In a few countries including the Czech Republic, Hungary and Ireland they were actually reduced in nominal terms.
Taxing Wages provides nationally comparative details about the taxation of employment incomes and the associated costs to employers for different household types and at different earnings levels. These are the key factors in determining the incentives both for individuals to seek work and for businesses to hire workers.
According to an article published by OECD on 28.03.12, at a meeting at OECD’s first Global Forum on Transfer Pricing tax, officials from 90 countries agreed on the need to simplify transfer pricing rules, strengthen the guidelines on intangible issues and improve the efficiency of dispute resolution.
Transfer pricing rules determine how international transactions within a multinational company must be priced to ensure each country receives its fair share of tax. Based on the OECD and UN Model tax conventions, the rules are meant to eliminate double taxation and ensure better compliance by companies. These rules now need to be simplified and made more robust. This is particularly critical in the area of intangible assets, whose location may have a strong impact on tax revenues.
Aggressive tax planning – untaxed income, multiple deductions and other forms of international tax arbitrage – is a growing concern for all governments.
OECD’s new report Hybrid Mismatch Arrangements: Tax Policy and Compliance Issues describes arrangements that exploit national differences in the tax treatment of instruments, entities or transfers to deduct the same expense in several different countries, to make income “disappear” between countries or to artificially generate several tax credits for the same foreign tax.
On 7-9 November 2011, delegates from Working Party No. 6’s Special Session on the Transfer Pricing Aspects of Intangibles (“WP6-TPI”) met with private sector representatives to discuss definitional and ownership issues related to transfer pricing for intangibles. The agenda for the meeting, presentation material submitted by private sector participants and list of participants have now been published.
Presentations at the consultation focused on five topics: (i) the definition of intangibles for purposes of Chapter VI of the OECD Transfer Pricing Guidelines; (ii) the definition and treatment of goodwill for transfer pricing purposes; (iii) the definition of the term “brand” and the importance of brand in transfer pricing analyses; (iv) the appropriate approach for determining entitlement to intangible related returns for transfer pricing purposes; and (v)the importance of corporate synergies in a transfer pricing analysis.
Mr. Chris Lennon, the Chair of the BIAC Tax Committee, said that the overriding objective of the business community in connection with the project is to achieve certainty and to achieve a set of rules that will help eliminate double taxation. He pointed out that agreement on a set of consistently applied definitions was a key element in achieving those objectives. He urged the delegates not to reopen issues already clarified in the recently concluded project on business restructuring as reflected in Chapter IX of the 2010 version of the Transfer Pricing Guidelines.
From the OECD site 22 July 2010 — The OECD Council today approved the 2010 versions of the OECD’s Model Tax Convention, the 1995 Transfer Pricing Guidelines and the 2008 Report on the Attribution of Profits to Permanent Establishments. The updates are the result of several years of work to improve these core OECD instruments in the area of international taxation.
As reported in the OECD page, average tax and social security burdens on employment incomes fell slightly in 24 out of 30 OECD countries last year as governments struggled to shore up faltering economies amid the worst recession in decades. But whether this trend will continue this year is uncertain given the widespread pressures on public budgets.
The OECD and the Council of Europe have agreed on an update to an international…