OECD Acts to Curb Tax Avoidance/Shifting by Multinationals

By Randi Morrison posted 06-08-2017 12:47 PM

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In the event you missed the Articles of Interest in yesterday's weekly Society Alert, on Tuesday, more than 75 countries and jurisdictions (as of yesterday's signing ceremony in Paris), including the EU's 28 member states, China, India and Australia - but excluding the US, signed or committed to sign an OECD-coordinated agreement aimed at limiting so-called "treaty shopping," or shifting profits to low-tax or no-tax jurisdictions (i.e., tax avoidance) by multinational companies. The "Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting" reportedly still needs to be ratified by the signatories' legislatures - a process that, according to this report in the WSJ, is expected to take time.

Co-head of European tax Michael Graft at the law firm of Denton Europe's says this concerning the impact on corporate treasurers' tax planning: “'The multilateral instrument takes away uncertainty, but also removes opportunities for creative tax planning that companies have used in the past... Once the agreement has been ratified by the legislatures of the signing countries—a process expected to take months, if not years—it should guarantee much greater coherence between international tax treaties, ultimately benefiting a majority of multinationals. But some companies might be left with international tax structures that no longer work.'"

See also the OECD's release, this Information Brochure, these FAQs, this Toolkit for application of the new agreement, and these articles from DW (included in yesterday's Society Alert) and CGMA.

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