ICC comments on the OECD Discussion Draft on Action 12: “Mandatory Disclosure Rules” (2015)

  • 11 November 2016

In the context of the G20 endorsed OECD/BEPS Action Plan, the International Chamber of Commerce (ICC) provided feedback on the OECD Discussion Draft on Action 12, concerning mandatory disclosure rules.

ICC submitted high level feedback to the OECD’s Discussion Draft on Action 12: mandatory disclosure rules of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan.

BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits ‘disappear’ for tax purposes and/or to shift profits to locations where there is little or no real activity but the taxes are low. This results in little or no overall corporate tax being paid.

Action 12 provides an overview of mandatory disclosure regimes and sets out recommendations for a modular design of a mandatory disclosure regime including recommendations on rules designed to capture international tax schemes. The draft aims to set a standard framework for a mandatory disclosure regime that ensures consistency while providing sufficient flexibility to deal with country specific risks and to allow tax administrations to control the quantity and type of disclosure. Speaking with authority on behalf of enterprises from all sectors in every part of the world, ICC notes that although the OECD’s recommendations generally reflect current “best practices”, several of the proposed recommendations are troublesome.

ICC is concerned about the OECD’s suggestions on International Tax Schemes. For example, ICC believes that any country should be free to adopt mandatory disclosure rules and a country’s failure to do so, should not impose excessive obligations on taxpayers that are not direct parties to a reportable transaction.

ICC also comments on the thresholds for disclosure and strongly objects to the use of hypothetical generic hallmarks – most notably in the case of premium fees – and urges caution against the inclusion of acceleration of losses as a standard for determining whether a loss transaction ought to be disclosed.