What did G20 Heads of Government discuss at the G20 Turkish Summit? Jeffrey Owens

Director WU Global Tax Policy Center at

the Institute for Austrian and International Tax Law

Mumbai, 3-5 December, 2015

Participants at the 2015 G20 Summit in Turkey

Reading the G20 Communique: What‘s there; What‘s not there

- We endorse the package of measures developed under the ambitious G20/OECD BEPS project.

- Widespread and consistent implementation will be critical

- To monitor and develop an inclusive framework by early 2016 with jurisdictions which commit to implement the BEPS project

- To provide appropriate technical assistance to interested developing economies in tackling the domestic resource mobilization

- We are progressing towards enhancing the transparency of our tax systems

- We support the efforts for strengthening developing economies‘ engagement in the international tax agenda

- We welcome Implementation Plans on beneficial ownership transparency

The Tax Agenda

- Determine further collective actions towards achieving strong, sustainable and balanced growth

- Boosting investments as a powerful driver of growth - We will also consider the composition of our budget expenditures and revenues to support

productivity, inclusiveness and growth - Rising inequalities in many countries may pose risks to social cohesion and can also have

negative economic impact - Strong impetus, concrete policies and actions to improve the investment ecosystem, foster

efficient and quality infrastructure - We endorse the G20/OECD Principles of corporate governance - The establishment of the private sector-led World SME Forum and Inclusive Global Value

Chains (GVCs) - Increase our efforts to implement all the elements of the Bali Package - We will continue our efforts to ensure that our bilateral, regional and plurilateral trade

agreements complement one another - Adopt a protocol, another legal instrument or an agreed outcome with legal force at COP21

which reflects the principle of common but differentiated responsibilities and respective capabilities

Reading the G20 Communique: What‘s there; What‘s not there …continued

The Broader Agenda

The BEPS Universe

BEPS: recommendations, not laws…

Minimum standards

__________________

• Action 5 – Counter harmful tax practices more effectively, taking into account transparency and substance

• Action 13 – Transfer pricing documentation & country by country reporting

• Action 14 - MAP

Reinforced standards

__________________

• Action 6 – Prevent treaty abuse

• Action 7 – Prevent the artificial avoidance of permanent establishment status

• Action 8 – Transfer pricing for intangibles

• Action 9 – Transfer pricing for risks and capital

• Action 10 – Transfer pricing for other high-risk transactions

Best practices

__________________

• Action 2 – Neutralize the effects of hybrid mismatch arrangements

• Action 3 – Strengthen CFC rules

• Action 4 – Limit base erosion via interest deductions and other financial payments

• Action 14 - MAP

Cross-border tax

cooperation

Taxpayer registries Multilateral Convention on

Mutual Administrative Assistance in Tax Matters

Exchange of information upon request

Automatic exchange of existing tax data

Tax Arbitration programme expansion

BEPS Multilateral Agreement

EU transparency packages quantifying evasion

Inter-governmental capacity development

Global solutions with interest on increase in local tax collection

Cooperative Compliance

Multiple instruments FATCA/CRS/TIEA/DTCs

“Cooperation between tax administrations is the new norm. What‘s filed with one is filed with all.”

Administrative cooperation Tax administrations working together

What is the agenda for BEPS II

(a) Complete technical details - Especially Actions 8, 9, 10 (b) Achieve consistent implementation - Challenges: Implement what standards (Minimum/Best practices; which options) - The Mechanism: A BEPS Global Forum?

The Multilateral Instrument: Action 15

- What is it? - Is it feasible?

- Where does OECD stand?

- What‘s the timetable?

- Why business should support

Unfinished business

- The elusive global consensus on source and residence taxation

- Dealing with the digital economy

- Tax competition and the race to the bottom

And the bigger agenda

- The role of taxation in: - promoting FDI and sustainable growth - delivering revenues needed by government - reducing inequalities - taking forward the COP21 agenda

BEPS and “Made in India”

- How will a BEPS empowered India Revenue Service react? - Will we see an increase in disputes? - And if so, how will the government react? - How important is BEPS for Indian revenue collection?

- Will it distract from bigger tax issues, (e.g., GST, black money)? - Is India now within the inner OECD circle?

The USA and China will dominate the global economy for the foreseeable future.

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$3,5

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$28,9

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$3,6

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$11,4

$20,9

$41,4

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$3,2

$5,5

$7,6

$6,2

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$3,6

$6,4

$3,9

$45,5

$10,7

$8,3

$4,5

$4,7

$16,5

$27,3

$0

$5

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USA

Canada

Mexic

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Bra

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Germ

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Italy

Spain

UK

Russia

Chin

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Japan

India

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Asia

EM

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2020 2030

Source: EY , Oxford Economics 2015, EIU

$78,8

$178,7

$39,6 $48,3

$104,9

$156,9

$44,2

$62,9

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200 US $’000

Nominal GDP per head US $’000 2050 Global gross output 2020 US$ Billion

Leaders of BRICS prior to the G-20 Summit in Antalya, Turkey