Last week, the CIAT Technical Conference was held in San Jose, Costa Rica, dedicated to analyze the challenges for the tax administrations involved in the BEPS project. After the formal opening ceremony, the presentation of the different topics began. The first presentation was by Pascal Saint Amans, Director of OECD, who highlighted how 2017 is a key year in the implementation of BEPS and devoted much of his speech to explain with great detail and precision the measures included in the minimum standard, as well as the future challenges that must be faced: the digital economy, the mobilization of internal resources to help the implementation of the measures, and the strengthening of the cooperation with international and regional agencies that must accompany this process. He left on the table a phrase that very accurately reflects the status of BEPS to affirm that we are transiting “from the tax policy to the tax administration” which is in charge of implementing these measures.

Next, a round of presentations was held on national and regional experiences related to BEPS. Gonzalo Arias, of CIAT, explained the activities of the regional CIAT networks that play an essential role to bring the voice of the region to international bodies and which have also served to identify priorities in the region within and outside BEPS (absence of comparable, doubts about the peer-review processes, etc.). The CIAT representative convened to consider whether the following BEPS Action Plan should be an “action 16” dedicated to the unique problems and issues of developing countries.

For his part, Ivo T. Guimaraes of the Receita Federal of Brazil explained in detail the implementation in Brazil of the country-by-country report, which has led to the adaptation of the ECF and the SPED, the incorporation of new web services, the preparation of frequently asked questions and user manual, and especially emphasized the development of a “Auditors’ Manual for the use of CbC” which is the basis for articulating an entire project for the training and formation of the Auditors of the Receita, to be  complemented with new tools for the risk analysis that allow exploring, handling and effectively managing the amount of information that will result from this enormous effort for transparency. For his part, the director of the Spanish Tax Agency Santiago Menéndez approached the Spanish experience with BEPS that has been marked from the beginning of the project by a proactive attitude that has led to approve the BEPS standards even before the publication of the initiative reports, reflecting a firm and consensual commitment to the OECD-G20 initiative. Adjustments to the normative on “patent box“, the introduction of the country-by-country reporting, the measures for the exchange of information on “tax rulings” or the signing of the Multilateral Instrument are examples of this commitment and proactivity – beyond the minimum standard – with which Spain has approached this initiative inspired by the conviction that it is necessary to address the problems of international taxation from a global perspective, overcoming any temptation of unilateralism.

Cécile Foos, of the Norwegian tax administration, reflected next on how digitalization has changed the way we relate to companies and how we should adapt to a digital environment in which we must increase efforts to develop tools for the risk analysis and improve the quality of data and records. She also emphasized how it is necessary to ensure the involvement of the various departments of the administration in the task of carrying out the BEPS standards package.

María Cecilia Ventura, of the AFIP of Argentina, detailed a scheme of tax planning, with strong impact in that country and replicated in other countries in the region, consisting of the triangulation of exports which constitutes what we could define as a “BEPS case before BEPS“. In this scheme, a divergence was detected in the transaction, between the physical transit of goods – usually primary products – and the documentary transit through various intermediaries lacking economic substance. These schemes were attacked through the implementation of the so called Sixth Method which, aside from the discussion as to its legal nature, constitutes a genuine turning point in the way in which tax planning operations in the export of goods as those described are treated. The developments in the behavior of taxpayers has led to the adoption of other measures such as the early report of sales, the creation of a regime of early report of profits or the development of new applications and computer tools to improve the crossing and the exchange of information to fight this type of operations. In this context, she expressed strong hopes that BEPS initiative will also help to prevent situations like the one described.

The session of Monday 18 concluded with an open dialogue on the progress and challenges of BEPS, in which the CIAT Executive Secretary Marcio F. Verdi insisted on the idea of cooperation and on the need to promote discussion by opening up spaces for dialogue on BEPS in the region. Pascal Saint Amans, of OECD, expressed how BEPS implies an opportunity that cannot be missed in order to avoid being isolated, and Manuel Tron, of IFA, warned of the speed in which the changes are occurring, which must take into account the costs of compliance for companies and businesses. The emphatic denial of some of the “misunderstandings over BEPS” by  Pascal Saint Amans was very enlightening; binding arbitration is not part of the minimum standard, however that it is a desirable objective; the country-by-country reporting is beneficial to all; the Common Transmission System is not an especially expensive operation. The real challenge is to address improvements in the management of risk, the key element to be able to handle the enormous amount of information that these initiatives will generate.  The round table concluded with a set of messages in which the three speakers agreed: it is necessary to face responsibly the uncertainty and lack of legal certainty which, ultimately, represents the biggest cost for businesses; BEPS is an opportunity to deepen and improve relations with taxpayers and tax intermediaries. Finally, they concluded by recognizing as a success all the progress that has been made in this area over the last five years.

And this way we reach the second day, Tuesday, September 19…

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