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New Report on International Tax-Ruling Exchanges

New Report on International Tax-Ruling Exchanges

Countries are mostly complying with the OECD's standards for exchanging tax-ruling information

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Countries are being increasingly compliant with the OECD's standards for exchanging tax-ruling information, according to the OECD's third annual peer review report. Harmful Tax Practices – 2018 Peer Review Reports on the Exchange of Information on Tax Rulings follows up on several country-specific recommendations that the OECD made last year.

This publication examines 112 jurisdictions and looks at whether they need to improve their systems for exchanging tax-ruling related information after agreeing to adopt the BEPS Action 5 minimum standard for countering harmful tax practices. The report includes 55 jurisdiction-specific recommendations for improvements to meet the minimum standard.

Although the OECD examined Canada in its review, once again it did not make any Canada-specific recommendations (this is consistent with its previous two reports). According to this publication, Canada met all of the OECD's terms of reference during its 2018 review.

Background

The BEPS Action 5 minimum standard consists of two parts. One part relates to preferential tax regimes, where a peer review examines whether a particular regime could facilitate base erosion and profit shifting and risk affecting another jurisdiction's tax base. However, this report mainly focuses on the second part of BEPS Action 5, which involves reviewing whether jurisdictions are committing to transparency through the compulsory spontaneous exchange of relevant information on taxpayer-specific rulings.

Findings

The report notes that, for the jurisdictions reviewed over the last three years, nearly 18,000 relevant tax rulings were issued and almost 30,000 exchanges of information took place by December 31, 2018.

This report looks at information exchanged for the 2018 year. It lists jurisdiction-specific recommendations for improving the timeliness of the exchange of information, ensuring that exchanges of information are made for preferential tax regimes that apply to income from intellectual property, and other areas of improvement. The OECD reviews 112 individual jurisdictions in its latest report, up from the 92 it reviewed in the prior year.

The report found that during the period of time under review:

  • Most jurisdictions had already undertaken steps to implement the necessary legal framework for spontaneous exchange of information on rulings
  • 80 jurisdictions did not receive any recommendations, having met all requirements (including Canada)

The next annual peer review will take place in 2020, it will continue to track the progress of jurisdictions and the actions taken to respond to any remaining recommendations. Discussions on whether the rulings standard has been effective, as well as the format for any further peer review process, will also take place in 2020. Any reviews carried out after 2020 will be subject to the agreement of the Inclusive Framework on BEPS.

For more information, contact your KPMG advisor.

Information is current to January 14, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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