TUAC - TRADE UNION ADVISORY COMMITTEE TO THE OECD

22/01/2015

The TUAC welcomes the opportunity to comment on the OECD Discussion Draft “Make Dispute Resolution Mechanisms More Effective” (hereafter “the draft”) for public consultation regarding implementation of Action 14 of the Base Erosion Profit Shifting (BEPS) initiative. The mandate of Action 14 is to “address obstacles that prevent countries from [re]solving treaty-related disputes under Mutual Agreement Procedures (MAP)” including arbitration. The OECD draft consists of amendment proposals to the OECD Model Tax Convention article 25 and its commentary and of additional proposals to strengthen access to MAP, including many references to the 2007 OECD Manual on Effective MAP (MEMAP). Compared with the other action points of the BEPS initiative, Action 14 is distinct in so far as it is more concerned with the risk for double taxation of MNEs, than with the opposite risk of  “double non-taxation”, which is at the heart of the BEPS initiative.

Overall, the TUAC welcomes the proposals contained in the draft. Tax compliance is a source of risk for companies. That risk needs to be managed and mitigated like other forms of risk: financial, market, social and environmental. This is particularly true for MNEs operating across several tax jurisdictions. Better access to MAP would increase the predictability of tax treatment of MNEs and, as such, would thereby facilitate the management of tax risk. We have a number of observations to share on the OECD draft, however. ...