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Monday, March 9, 2009

OECD: Building better tax consensus!

No can't ever say that the OECD isn't consistent. They are always dreaming up ways to re-invent their tax crackdown. The latest is their tax crackdown on transfer pricing of multi-nationals--MNE's.

They recently delivered a list of public comments to their TRANSFER PRICING ASPECTS OF BUSINESS RESTRUCTURINGS: DISCUSSION DRAFT FOR PUBLIC COMMENT
19 SEPTEMBER 2008 TO 19 FEBRUARY 2009
...yes, I did just copy and paste the title of the document.

They reckon in the main report that a lack of true oversight in this area, may lead to significant uncertainty for business as well as for governments and possible double taxation or double non-taxation, in the absence of a common understanding.

Sounds fair enough. But, I thought MNE's "outsourced" to gain an advantage and, transfer pricing, comes with that benefit of outsourcing?

In any event, the report, in regards to the strength of its implications, is weak. For example, they have a criteria that would allow for MNE's to be taxed under the rational assumption of domestic businesses, that employ the same tactic. Basically, it's like a dog chasing its tail.

The practice is for an MNE and the cross border effect, is what is at the core. If you are going to set up a criteria that allows it to be taken into account as a domestic firm--along with the same concerns not being relevant-- then, you basically would have to set up a root origin and the national government, would be responsible for the taxation. Not what I think the OECD had in mind, in regards to enforcement of any laws/taxation regulation to come of it.

The comments are rather mixed. Some are weary of the report itself, citing that it's giving over-arching guidelines to governments for more taxation and reasons for it. To others, feeling that it is rather appropriate in many regards. It's hard to bead who's who...but, as more details come out about it, you will get a sense of the politics behind the effort.

The OECD, did not do all of that work, to come up with no sound move forward to tax more!

In any event...the report, is really REALLY boring--why did I read any of it, you ask!?!?!

Enjoy!
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