IOTA Forum on Implementation of Measures to Counter Base Erosion and Profit Shifting (BEPS)

Erika Szabó's picture
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In recent weeks, IOTA has been engaged in various technical activities. From 17th to 19th October 2023, IOTA hosted the Forum on Implementation of Measures to Counter Base Erosion and Profit Shifting (BEPS) in Budapest, Hungary one of the most anticipated hybrid activities of the IOTA Work Programme. This event welcomed 39 tax officials from 21 IOTA member tax administrations gathered in person at the venue, while more than 80 attendees connected online to the activity.

The Forum is an important platform for experts of IOTA member tax administrations to discuss and share strategies and practical applications of working methods and tools developed to effectively tackle BEPS. This year’s meeting featured speakers from various IOTA member tax administrations including Armenia, Austria, Belgium, France, Georgia, Greece, Latvia, Spain, Sweden, and Switzerland along with the United Kingdom. Furthermore, it was an absolute honor and pleasure to welcome Laura Stefanelli, as a guest speaker from the IOTA’s international partner organisation, the OECD.

The event was focused on various aspects of the BEPS Action Plan such as tax challenges arising from the digitalisation of the economy, Transfer Pricing emerging issues (Intangibles & DEMPE Analysis, Financial Transactions, Comparability Issues), as well as the practical use of data received from the exchange of CbC Reporting, as well as from the mandatory spontaneous exchange of on tax rulings (under BEPS Action 5).

On the first day, the main topic of discussion at the Forum on BEPS was about Addressing the Tax Challenges arising from the digitalisation of the economy and CbC Reporting. Forum participants were updated on the latest developments of Pillar 1 and Pillar 2 by the OECD’s through an analytical and to the point presentation delivered by Laura Stefanelli, while Pillar 2 experts from France, Switzerland, and the United Kingdom shared their country experiences and challenges that they face up to day during the way of implementation of Globe Rules.

  • OECD: Update on Pillar 1 and Pillar 2 Developments presented by Laura Stefanelli;
  • United Kingdom: “Addressing the Tax Challenges arising from the digitalization of the economy Pillar 2 UK update” presented by Michael Hashemi (joining online);
  • Switzerland: “Complementing the minimum taxation to an existing tax system” presented by Marc-Antoine Bree (joining online);
  • France: “Implementation of Pillar 2 rules from a French perspective” presented by Antoine Guici.

The afternoon session focused on the Practical use of data received from the exchange of CbC Reporting, exploitation of data, and challenges faced insofar, and the following countries shared their insights regarding this topic:

  • Austria: “CbCR from a tax auditors’ Perspective” co-presented by Andreas Kallina and Branko Neumann-Vukovich;
  • Greece: “The use of CbCR data” presented by Georgia Thoikou and Chrysanthos Pelekanos.

On the second day, the main topic “Transfer Pricing emerging issues (Intangibles & DEMPE Analysis, Financial Transactions, Comparability Issues)” raised great interest among the tax administrations, especially since practical issues and real case scenarios were touched, proving that Transfer Pricing is a timelessly hot topic for tax administrations. Therein, country presentations reflected on the topic where:

  • Spain: “Intragroup use of a trademark. Arm´s length compensation” presented by Esther Asenjo Martín;
  • Belgium: “Industrial franchise: comparability issues” presented by Christine Scheepmans; 
  • Latvia: “Marketing expenses and remuneration for increasing brand value using DEMPE functions” Co-presented by Liene Prūse and Toms Reiss;
  • Georgia: “Financial Transactions – Emerging issues in Georgia” presented by Giorgi Javakhadze, Georgia

Country presentations on the third day, initially dealt with the “Transfer Pricing emerging issues” concept, while also revolving around the topics of “Transfer Pricing and APA’s”, along with the “Practical use of data, received through the mandatory spontaneous exchange on tax rulings, difficulties raised and lessons learned”. More specifically:

  • Belgium: “International tax and TP issues involving financing structures with pass-through entities” presented by Tycho Torfs.
  • Armenia: “Transfer Pricing comparability issues and the process of APAs” presented by Andranik Hakobyan;
  • Sweden: “Challenges and solutions for a more efficient risk analysis management of tax rulings” presented by Urban Jakobsson, Sweden

Before the end of the event, 2 additional sessions followed: a summary of the questionnaire filed by 24 IOTA Members, which was delivered by IOTA International Taxation Expert Alexandros Roukalis, dealing with questions such as tools developed internally or outsourced in order to deal with CbCR data, overall satisfaction of practical use of CbC data and proposed actions, databases used for auditing financial transactions, difficulties faced with regard to comparability issues during a TP audit, and challenges for the practical use of data received through the exchange on tax rulings. Lastly, the Steering Group members and Forum attendees were actively involved in an open debate to share their insights on the biggest challenges they faced on the issues discussed during the meeting, as well as sharing their comments on future steps and proposals for the forthcoming activities.

All the materials and presentations are now available online and the event recording will be uploaded soon to the event’s webpage. This event was led by the IOTA International Taxation Experts Alexandros Roukalis and supported by Massimo Morarelli.