26 09 2017

OECD Expands Consultation On Offshore Indirect Transfers Of Assets

The World Bank has released French and Spanish translations of its Toolkit on the taxation of offshore indirect transfers and extended the deadline for feedback to October 20.

The tax treatment of "offshore indirect transfers" (OITs) – in essence, the sale of an entity owning an asset located in one country by a resident of another – has emerged as a significant issue in many developing countries. This has been identified as a concern in IMF technical assistance work and scoping by the OECD, and was not covered by the G20-OECD project on Base Erosion and Profit Shifting (BEPS). In relation to the extractive industries, OITs are also the subject of work at the UN.

The toolkit was released by the Platform for Collaboration on Tax, a joint initiative of the OECD, the International Monetary Fund, the United Nations, and the World Bank Group to help developing countries address concerns surrounding the tax treatment of such transfers, which are increasingly being used by multinationals to minimize tax liability.

"This draft toolkit, 'The Taxation of Offshore Indirect Transfers – A Toolkit,'" the OECD said upon announcing it, "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 is intended to complement 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.