Peter Barnes Comments on What the Model CbC Legislation Says About Transparency

June 22, 2015, Worldwide Tax Daily

Worldwide Tax Daily's quoted Peter A. Barnes regarding the OECD releasing Action 13 with the goal of enhancing transparency for tax administrations. Additionally, this action will result in multinational enterprises (MNEs) using a common CbC reporting template to provide tax authorities with "needed information on their global allocation of income, economic activity, and taxes paid among countries." For the complete article, please visit Worldwide Tax Daily's website (subscription required).

Excerpt taken from the article "What the Model CbC Legislation Says About Transparency" by Marie Sapirie for Worldwide Tax Daily.

Breaking Ranks?

"I am optimistic that countries will indeed follow the OECD's lead, but there are no guarantees," said Peter A. Barnes of Caplin & Drysdale Chtd. So far, countries have indicated that they will use the OECD model template and accept treaty exchange. "But if even one country breaks rank and individualizes the template, or insists that taxpayers provide the country-by-country report directly to that country's tax examiners, then it will be difficult or even impossible for the OECD and other countries to discipline the rogue country," Barnes said.

If a large trading country adds a column or two of additional data on the uniform template, or requires taxpayers to file the report with their tax returns, the divergence could be highly detrimental to the success of the project. "The OECD has resisted these one-off approaches, but the only real power that the OECD wields is peer pressure. Let's hope that is power enough, because both taxpayers and tax administrators will benefit from a harmonized system that works," said Barnes.

Headed Toward Full Transparency?

The OECD has worked diligently to design a global CbC reporting regime that has the greatest chance of success, but whether it succeeds is dependent upon the cooperation of individual countries. "The huge question that looms now is whether countries will be willing to follow the OECD's lead and put the value of a harmonized process ahead of their own, individual interests," said Barnes. If the current timeline is adhered to, taxpayers will

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