Tax Certainty Agenda

777. If an MNE Group does not agree with the recommendations of the Review Committee (including adjustments agreed by the Panel on the basis of objections from other tax administrations) or, where appropriate, with the findings of the Declaratory Committee, it may withdraw its request for advance guarantee (unless the MNE agrees in advance to be bound by the decision of the Declaratory Committee). The MNE group can then rely on national procedures in each territory. 781. Depending on the final scope of Amount A agreed in the inclusive framework, a number of MNE Groups may also require tax administrations to be certain as to whether or not they fall within this scope. However, unlike the procedure described in the remainder of this chapter (which could be an annual process for some MNE Groups), it is likely that an MNE Group will need certainty that it will only be included in Amount A once or periodically after a change in its business, structure, revenue or profitability. A possible approach to give MNE Groups certainty that they fall within the scope of the A Amount is described below. The event provided an opportunity for tax policy makers, tax administrations, business representatives and other stakeholders to take stock of the tax security agenda and seek further improvements in dispute prevention and resolution. The tax certainty framework set out in the first consultation paper aims to provide MNE Groups (MNEs) with certainty on all aspects of the A amount rules. To achieve this, the document proposes three mechanisms: 736. Flexibility in conducting an initial audit should allow lead tax administrations to identify low-risk multinational corporations quickly and with certainty and without the need for panel review, thereby reducing the resources required by all tax administrations.

However, an initial review is not necessary, for example if a lead administration does not have the resources or capacity to conduct an initial review, or if it considers that a panel review is necessary in all cases (e.g. because this is the first year of application of Amount A for the MNE Group and the lead tax administration considers that a review by a group of tax administrations would be beneficial). 757. If, at any time, the lead tax administration should become aware that the appellate body cannot reach an agreement and that this matter is unlikely to be resolved in the panel, it should consider terminating the panel`s review by concluding that no agreement has been reached. Any panel review extending up to [12 months] from the commencement date is expected to be terminated without agreement. This should provide an incentive for the Appellate Body to reach an agreement to the extent possible and, if this is not possible, allow the procedure to move to the destination panel stage, thereby ensuring the security of the MNE Group within a reasonable period of time. 714. As described in Chapter 10, in order to facilitate the uniform implementation of Amount A by MNE Groups and tax administrations, a standardized set of self-assessment and documentation for the reverse charge of Amount A is being developed, which can be used in all jurisdictions. These are used by multinational groups, whether or not a particular multinational group applies for an advance tax guarantee. 731. Where such evidence is submitted, the lead tax authority shall notify the coordinating body as soon as possible or within [one month] that its request for a tax guarantee for amount A will be granted. Incomplete applications will not be accepted and the lead tax administration will inform the coordinating body of any outstanding items that should be provided.

In exceptional cases where the lead tax administration knows or is informed (e.g. by the MNE Group or a relevant tax administration) that the annual accounts of an MNE group or other information included in the calculation of Amount A are subject to change or readjustment, which will affect Amount A; The lead tax authority may reject the MNE guarantee claim. may, however, agree that an application may be made as soon as the final position is known. There is no other way to reject a complete application for a tax guarantee from a multinational group of companies. Seven meetings were on the agenda for Tax Certainty Day: a UK official noted that although the UK does not use standardised benchmarks, benchmarks can generate efficiencies and provide a higher level of tax security. He stressed that a critical mass of MAP cases is important to support such use. Finally, he said that the question of whether the UK could gain a significant advantage in this regard was still under discussion. In addition, he said that wider and more consistent use of digital technologies would contribute to both the speed and effectiveness of FPAs, and called for work on standardized criteria. He expressed the view that significant tax certainty could be created through multilateral MAP and APAs, he said. He concluded by noting that increased publicity and transparency (such as the new US-Mexico agreement) are useful in building taxpayer confidence and suggesting that businesses should further explore the possibility for jurisdictions and the OECD to develop a TPM-free APP-type tool that addresses a much wider range of tax issues.

Any disagreement arising during these tax safeguards must be resolved by a binding procedure of the declaratory panel. If a group does not invoke these safeguards, the legal framework also provides for the possibility for tax administrations to agree to cooperate in a coordinated review. 752. The Commission shall conduct a review of the self-assessment of a MNE group, including each element of determination and allocation of the A amount, including the identification of exculpatory entities. The verification may also include a review of factual information provided by the MNE Group to ensure the accuracy of the information. This process should include a series of conference calls and email exchanges, which may be coordinated by the lead tax administration or the lead tax secretariat and led by the lead tax administration. If an relevant tax administration that is not a panellist identifies possible concerns regarding the self-assessment of Amount A by a MNE group, it should raise them with the lead tax administration as soon as possible. This issue is then addressed directly by the lead tax administration or included as a specific consideration in the panel`s review of the MNE Group`s self-assessment return. This reduces the risk of delays in the subsequent tax security process if an affected tax administration raises an objection that could have been addressed during the panel`s review. 750.

As noted above, it is essential that all members of the inclusive framework be able to participate fully in this tax security process, and in particular in the panel reviews that are at the heart of the process. Therefore, it will be important to develop and deploy capacity-building tools to assist developing countries.