Talking about international collaboration on tax is easy. Doing it is harder.

27 April 2016

Rebecca Reading

The OECD has announced that the focus of their next forum on tax administration plenary meeting will be the role of tax administrations in implementing the BEPS actions. The forum comprises representatives from 46 of the most advanced tax administrations, and the plenary to be held in Beijing next month is expected to include heads of tax administrations from FTA members and other invited guests.

It’s a tough ask for tax authorities to work together. Despite various mechanisms for mutual agreement being in place, authorities have pursued a wholly domestic agenda to increase their own share of the tax take. But the OECD BEPS project expects a more coherent approach.

Notoriously protracted cross-border disputes should become things of the past. Instead, as international businesses change their behaviours to pay tax where they should, tax authorities must also change to become more cooperative. It is only fair that this should happen, but just as a few years ago it was impossible to imagine multinationals willingly paying more tax, based on current behaviour, it is difficult to see tax authorities willingly surrendering their takings in favour of other countries.

The FTA also aims to support developing countries to improve their tax administration. The OECD has always been quick to dismiss allegations that they are a narrowly focused interest group for the world’s richest countries. They have now launched an initiative called The Platform for Collaboration on tax in conjunction with the IMF, UN and World Bank. This joint concept is an attempt to join up the world’s key players and has the potential to blunt criticism from tax campaigners that the OECD side-lines the developing nations.

There has been so much talk in recent weeks about improved cross-border cooperation in the name of transparency that perhaps transparency fatigue is setting in. After all, talking about collaboration is easy. Doing it is harder.

If you would like to discuss any of these points further, please contact Rebecca Reading or your usual RSM contact.

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