International tax rulings and transparency — OECD update
International tax rulings and transparency OECD update
The OECD did not make Canada-specific recommendations for the fourth consecutive year
The OECD says transparency on tax rulings is now a fully entrenched part of the international tax framework. The OECD's 2019 Peer Review Reports on the Exchange of Information on Tax Rulings examines 124 jurisdictions (up from 112 in 2018) in the spontaneous exchange of information on tax rulings, in accordance with the BEPS Action 5 minimum standard.
This publication follows up on several country-specific recommendations that the OECD made last year and includes 58 jurisdiction-specific recommendations for improvements to meet the minimum standard.
Although the OECD examined Canada in its review, it did not make any Canada-specific recommendations (consistent with its previous three reports). According to this report, Canada met all the OECD's terms of reference during its 2019 review.
The OECD regularly reviews regimes that may be "harmful" under the BEPS Action 5 minimum standard. BEPS Action 5 focuses on improving transparency, including compulsory spontaneous exchange on rulings related to preferential regimes, and on requiring substantial activity for preferential regimes such as intellectual property (IP) regimes and no- or nominal-tax jurisdictions.
This specific report mainly focuses on the progress made by jurisdictions in the spontaneous exchange of relevant information on taxpayer-specific rulings.
OECD report findings
The OECD report notes that, for the jurisdictions reviewed over the last four years, almost 20,000 cumulative relevant tax rulings were issued and over 36,000 exchanges of information took place as of December 31, 2019.
This report looks at information exchanged for the 2019 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 report noted that of the 124 jurisdictions reviewed, 30 were unable to issue in-scope rulings. The report found that 62 (of the remaining 94) jurisdictions did not receive any recommendations, having met all requirements (including Canada), while 12 received only one recommendation.
The OECD notes that the Inclusive Framework is working to ensure ongoing transparency, including through a review of the overall effectiveness of the standard and the development of a renewed peer review process for the years 2021-2025.
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