|Ibec Economics and Taxation Committee –
Briefing Note on Business at the OECD (BIAC) Tax Committee meeting
By Gerard Brady, Ibec Head of Tax & Fiscal Policy
I am sending on a short briefing note regarding the Business at OECD (BIAC) tax committee meeting I attended in Paris last Friday. The meeting was focused primarily on recent progress on digital taxation proposals.
There were three main updates as well as further discussion. Those updates were:
- Will Morris, Chair, BIAC Tax Committee on Taxation and PwC UK – covered broad updates on Digital Taxation, implementation of the Multilateral instrument and Transfer Pricing changes.
- Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration (CTPA) and OECD lead on all elements of BEPS and Digital Tax on the OECD proposals – discussed the OECD views on ongoing discussions around Digital Taxation and the political progress on it both at the OECD and in some of the larger countries he has visited.
- This was followed by updates from both EU members of the Committee on views from their domestic countries and US members on tax issues including Digital Tax and President Donal Trump’s tax reforms.
The meeting took place under Chatham House Rules but there were several key takeaways from the overall conversation:
1. Reporting by the Financial Times on the meeting of EU finance ministers, in Sofia on the 28th of April, appears to have been inaccurate, according to some who were in the room. In particular, reports that the UK had performed an about turn on their position of supporting a Digital Tax were regarded as totally inaccurate. The view of all speakers was the UK still fully supports the Digital Tax. In addition, reports that Angel Gurría, the Secretary General of the OECD, had committed to delivery on the Digital Tax agenda in 2019 rather than 2020 were also wide of the mark and based on a miscommunicated joke about the views of Phillip Hammond on the issue (who was pushing for the date for an OECD proposal to be brought forward by a year).
2. It was also the view of most of the speakers that the US position opposing the Digital Tax has softened somewhat since the election of Donald Trump. It was the view in the room that there were three buckets of countries – those opposed in any form (Group 1), those who are sceptical but open to a ‘reasonable discussion’ (Group 2) and those for a Digital Tax (Group 3). Ireland and Singapore were the only developed countries seen to be in group 1. Most of our allies on this in Europe (the Nordics, Benelux, Baltics) along with the US, Germany and China were seen to be in group 2. Group 3 consisted of the UK, Italy, France, Spain and Austria. It was noted that over the past 12 months the US had gone from group 1 to group 2 and the Germans from group 3 to group 2 as their new Governments settled in.
3. There was some confusion from the US side about the views of EU countries on the Commission’s Digital Tax proposal. Ireland, the Nordics and the Baltics were seen by the EU side as being against the EU Commission’s proposal quite clearly (with some discussion on the Dutch position). However, on the US side of the table their view from interaction with finance ministers in EU Member States (including Ireland) was one of ‘disappointment’ and ‘surprise’. This seemed to stem from the fact that various US business groups and corporates could not get a firm commitment from finance ministries on their willingness to veto the Commission proposal. The view from some in the room was that the lack of commitment amongst member states stemmed from a need to preserve political capital along with a wish from EU finance ministries for the US companies to do more to make their own case.