Tax-News.com -- The Platform for Collaboration on Tax, a joint initiative of the OECD, the International Monetary Fund, the United Nations, and the World Bank Group, has launched for consultation a draft toolkit designed to help developing countries address concerns surrounding the tax treatment of offshore indirect transfers of assets.
Releasing the toolkit, the OECD said the tax treatment of "offshore indirect transfers" (OITs) – the sale of an entity located in one country that owns an "immovable" asset located in another country, by a non-resident of the country where the asset is located – has emerged as a significant concern in many developing countries.
The OECD explained that it has become a relatively common practice for some multinational corporations trying to minimize their tax burden, but there is no unifying principle on how to treat these transactions, and the issue was not addressed in the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.
"This draft toolkit, 'The Taxation of Offshore Indirect Transfers – A Toolkit,'" the OECD said, "examines the principles that should guide the taxation of these transactions in the countries where the underlying assets are located. It emphasizes extractive (and other) industries in developing countries, and considers the current standards in the OECD and the UN model tax conventions, and the new Multilateral Convention. The toolkit discusses economic considerations that may guide policy in this area, the types of assets that could appropriately attract tax when transferred indirectly offshore, implementation challenges that countries face, and options which could be used to enforce such a tax."
The toolkit responds to a request by the Development Working Group of the G20, and is part of a series the Platform is preparing to help developing countries design their tax policies, keeping in mind that those countries may have limitations in their capacity to administer their tax systems. Previous reports have included discussions of tax incentives, and external support for building tax capacity in developing countries. This series complements the work that the Platform and the organizations it brings together are undertaking to increase the capacity of developing countries to apply the OECD/G20 BEPS Project.
The Platform is inviting comments on the following specific questions:
Comments must be received by September 25, 2017.