The Latest on BEPS – 26 February 2018 - Ernst & …

1 26 February 2018 . Global Tax Alert The Latest on beps . 26 February 2018 . OECD. EY OECD beps project On 19 February 2018 , Serbia joined the beps Inclusive Framework bringing Stay up-to-date on the OECD's project to 112 the total Members in the framework. As a new beps Member, Serbia on Base Erosion and Profit Shifting committed to comply with the beps Minimum Standards, which are contained in with EY's online site containing a Action 5 (countering harmful tax practices), Action 6 (preventing treaty abuse), comprehensive collection of resources, Action 13 (transfer pricing documentation) and Action 14 (enhancing dispute including news, Alerts and EY's beps resolution).

2 Serbia will also participate on an equal footing with the rest of beps . developments tracker. members on the remaining standard setting under the beps project, as well as the review and monitoring of the implementation of the beps package. Copy into your web browser: On 14-16 February 2018 , the Platform for Collaboration on Tax (PCT) a joint initiative of the International Monetary Fund (IMF), OECD, United Nations (UN), EY Global Tax Alert Library and the World Bank Group to strengthen collaboration on domestic resource mobilization held its First Global Conference at the UN Headquarters in Access both online and pdf versions New York.

3 The conference focused on the key directions for tax policy and of all EY Global Tax Alerts. administration needed to meet the Sustainable Development Goals. Copy into your web browser: On the agenda of the plenary sessions was, among others, a discussion on beps . and the intense activity in recent years with respect to international taxation. During the 5th Session, speakers presented the new opportunities for enhanced participation of developing countries in international tax policy discussions and institutions as a result of the advent of initiatives like the Automatic Exchange of Information, the beps project, and the active engagement of the UN Tax Committee, but also the new challenges to fully realizing the benefits of international cooperation on tax.

4 The conference aimed to provide guidance to countries and other stakeholders on how to better target tax efforts to achieve broader development goals. 2 Global Tax Alert Insights from the conference will help inform and shape the in due time about each of the steps mentioned in phase 1, future work of the PCT members and partners, including the including, where relevant, an English translation of their draft IMF, OECD, UN and World Bank. The forthcoming work of the legislation(s) as presented to their Parliament; and (iii) in PCT will focus on the completion of the Platform Toolkits, phase 3 (by the agreed deadline) an English translation of among others, to help countries address challenges in the final measure(s) as enacted should be sent.

5 Technical international taxation. By mid- 2018 , it is expected that there assistance to the jurisdictions to help them in meeting their will be an update to the G20 on tax certainty and developing specific commitments will be provided by the Commission countries. Services and by the OECD Secretariat or Member States. At the end of each semester, progress reports on the European Union monitoring process will be submitted to the ECOFIN and an updated version of Annex II of the 5 December 2017 Council On 15 February 2018 , the Council of the European Union conclusions will be included in these progress reports. As a (EU) published the work programme during the Bulgarian last step, at the beginning of 2019 (respectively 2020), the Presidency as agreed by the Code of Conduct Group (COCG) COCG will assess the overall implementation of commitments (business taxation) meeting of 14 February 2018 .

6 Based on made by jurisdictions with a view to updating the EU list of this work program, the COCG will work in the context of the non-cooperative jurisdictions for tax purposes accordingly. Council conclusions of 5 December 2017 on the EU list of non-cooperative jurisdictions for tax purposes, and it will in particular agree on procedures to carry out the monitoring United Nations process, and prepare a progress report to the Economic In February 2018 , the Report on the Fifteenth Session of and Financial Affairs Council (ECOFIN) on this matter before the Committee of Experts on International Cooperation in summer 2018 .

7 Furthermore, it is mentioned in the published Tax Matters (Committee), which was held by the UN on program that the COCG will observe how the defensive 17-20 October 2017 in Geneva, Switzerland, was released. measures agreed on 5 December 2017 are applied and The report describes a lot of substantive issues related to tax explore further coordinated defensive measures in the tax cooperation in tax matters that were discussed during the area. Among the agreed tasks, the COCG will also continue event. Main topics, among others, were the tax challenges in work on the application of the principles of the modified the digitalized economy, possible update of the UN Practical nexus approach to intellectual property regimes and, in Manual on Transfer Pricing for developing countries, issues particular, monitor whether the Member State who did not related to permanent establishments, software royalties and take any action starts amending its patent box regime so hybrid entities, as well as the Mutual Agreement Procedure that it complies with the modified nexus approach by the (MAP)

8 And the handbook on dispute resolution. end of 2018 . According to the released report on the Fifteenth Session, On 15 February 2018 , the Council of the European Union the presenters discussed that the main tax challenges in the published Procedural guidelines for carrying out the process digitalized economy concern the possibility for multinational of monitoring commitments concerning the EU list of non- enterprises to generate income in States without having a cooperative jurisdictions for tax purposes as agreed by the physical presence or nexus, allowing them to avoid paying COCG (Business Taxation) in its 14 February 2018 meeting.

9 Taxes to source States, the determination of the place of value The monitoring process as set out in the published guidelines creation for digital data when determining the State to which will be carried out based on the ECOFIN conclusions of the profits should be attributed, and the risk of introducing 5 December 2017, in particular Annex IV. inconsistent treatments between online retailers and brick- The sequencing of the monitoring process will start with and-mortar retailers. Apart from the challenges, many gathering information by the jurisdictions in three separate benefits and opportunities derive from the digitalization of phases as follows: (i) in phase 1 (by 9 March 2018 ) the the economy for tax administrations.

10 It is mentioned in the jurisdictions have to send the precise timeline and description Report that if tax administrations were caught up with speed of the steps for the implementation of the commitments that of change in the business environment and engaged more they have taken; (ii) in phase 2, they have to send information in technology, they could increase cooperation with other Global Tax Alert 3. tax administrations and set clear international standards. It is intended that once enacted, these rules will apply Reference was also made to the work of the OECD, and its retroactively from 1 January 2016. The time period for difficult task to draft a report on this issue, which will focus submissions on the draft legislation closed 23 February 2018 .