OECD Mandatory Disclosure Rules: CPA Canada Opinion
The complete CPA Canada report is available here.
“We believe that the OECD could address the lack of comprehensive data available to tax authorities for their tax law enforcement purposes without unduly burdening taxpayers by implementing the following recommendations, discussed in the body of this letter:
- Consider existing domestic anti-avoidance rules.
- Consider tax authority capacity of each country in weighing the benefits and costs of imposing a mandatory disclosure regime on all OECD members.
- Defer further action on mandatory disclosure until the outputs of the other Actions in the OECD’s Action Plan are finalized.
- Propose disclosure only after the plan has been implemented. Earlier disclosure, if required, should be the obligation of the promoter.
- Only require users of a tax scheme to report it if the promoter is not resident in the jurisdiction requiring disclosure or reporting by the promoter is not possible.
- Keep the proposals tightly focused on instances of aggressive avoidance schemes and require disclosure from the promoters, except in limited circumstances.
- Limit disclosure to new or innovative aggressive tax planning arrangements only.
- Propose disclosure only where tax avoidance is a main benefit of the arrangement, and include a de minimis test to reduce the compliance burden.
- Identify reportable schemes through the use of objective tests/hallmarks, and not hypothetical tests.
- Encourage governments to obtain data through any information exchange agreements that are in place before requesting it from the taxpayer.
- Ensure reporting by advisers other than promoters is not required.
- Ensure that disclosure requirements are not proposed that would conflict with domestic legal professional privilege.
- Limit mandatory disclosures to bare facts only (excluding third party analysis and processed facts)
- Keep the compliance costs and business impact for the majority of compliant taxpayers and their advisors at the forefront of the OECD’s deliberations at all times.”
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