Tax Specialists Discuss OECD BEPS Framework and Corresponding SAT Public Notice Go back »
2016-09-23 | Beijing
The European Chamber hosted a seminar on 20th September, to examine and discuss the measures taken by the OECD to shore up international tax rules, with respect to addressing base erosion profit shifting (BEPS).
China has been heavily involved in the G20/OECD BEPS project, and the event focused on China’s recent legislative activities within this framework. Speakers from the OECD, the State Administration for Taxation (SAT) and tax advisory specialists explained the measures that have already been enacted, on both an international and domestic level, and their implications for European business.
One Senior Advisor for China at the OECD, first gave an overview of the current cooperation between the international organisation and China. Another Tax Policy Advisor at the OECD delved deeper into the BEPS framework, which provides 15 actions that equip governments with the instruments they need to ensure that profits are taxed based on where value is created, giving business greater certainty. He noted that the OECD is encouraged by China’s engagement, and expressed hope that it will help to provide a more predictable operating environment for European multinational corporations (MNCs) operating in China.
A representative from the Anti-tax Avoidance Division of the SAT presented the background and context of the recently-released Notice 42 (Notice). It was issued to meet the minimum standard under Action 13 of BEPS on transfer pricing documentation and country-by-country reporting. She also introduced the structure and timeline of the Transfer Pricing Documentation Report and filing requirements for Related Party Transaction Disclosure Forms.
The presentation informed a candid panel discussion involving the OECD Representatives and a number of other tax experts. One expert noted that German multinationals are pleased with the Notice as not only will German and Chinese Tax policies be further aligned, but also added transfer pricing rules will enable MNCs to position themselves better.
Another expert raised questions about the enforceability of the Notice at the local level. The moderator added that uncertainty for MNCs may be heightened when receiving similar auditing requests from both tax and customs authorities. The OECD Tax Advisot noted that this is part of a larger trend and that the OECD has called for increased interagency cooperation in this regard.
A consensus was reached among the panel that the change the international tax landscape is experiencing is positive, with additional transparency provided by the media and other channels. Consequently, tax authorities are changing their approach to nefarious activities, which previously were implicitly accepted. Newly created standards also help safeguard fair distribution of tax revenues with OECD tax treaties, the panel agreed, enabling tax payers to request real-time information on dispute settlements. The result is a more transparent framework under which tax authorities operate.
