Many companies will have to change their conventional models of business conduct

It represents a road map for 15 areas which will, in the developers' opinion, allow to create barriers for corporations which pay little taxes, if that. Such areas include, but not limited to, special attention to challenges relating to the digital economy, tightening of rules of foreign controlled companies, limitation of tax base erosion through deduction of income expenses, setting requirements for tax payers to disclose information on aggressive tax planning they use and development of multisided agreements aimed to replace the effective double taxation treaties.

The problems to be resolved by the OECD proposals are objective and have arisen a while ago - sooner or later they would have to be addressed. At the same time, these problems are almost impossible to solve at a level of the legislation of an individual country - no instruments will be effective enough - hence, development of approaches to solve these problems at an international level is a necessary step forward.

 

The degree of practical feasibility of the OECD proposals will depend on what specific measures (tools, mechanisms) within the outlined areas are proposed, whether an international consensus is reached on such measures and how effective national tax authorities in each country participating in the process will perform. For example, formerly, in order to solve a problem of paying taxes in the field of e-commerce at an international level it was proposed to recognize the relevant computer server as a permanent establishment for tax purposes. OECD supported this approach but with certain reservations relating, among other things, to possibilities of its practical implementation. For example, the fact that a server is quite easy to move so this approach does not solve the mobility problem within the framework of the digital economy in a principal manner. In addition, there are so many servers and under such conditions it is difficult for tax authorities to monitor compliance with the new rule for a server being a permanent establishment or to take enforcement measures in case of non-compliance with this rule2.

 

The areas specified in the Action Plan do not give any rise to doubt with respect to feasibility of the proposals, however, a desire of certain countries to defend their position in the international tax competition and the fact that administration of new solutions can be quite complex and expensive may have their negative impact. At the same time, it appears that it is too soon to talk about feasibility of the plan for no specific measures have yet been developed.

 

What will change for Russian companies due to introduction of the new tax organization model at an international level depends on actions of the Russian government and tax administration. If Russia accepts conditions of the multisided agreement without any significant alleviative reservations and expresses its political will to establish conditions for transparency of information on organization of business processes and relevant financial flows for all market participants, many companies apparently will have to implement some internal reforms - on changing an organizational structure and/or traditional business conduct models. It is quite important here what resources and possibilities will be at disposal of tax authorities for practical realization of provision of the agreement and how active and professional they will participate in the process.

 

T.A. Malinina, Head of Tax Policy Department

1 See http://www.oecd.org/ctp/BEPSActionPlan.pdf.
2 See also: Matter of Consideration of Modern Technologies and Special Features of Business Conduct. Moscow: Дело (Business), 2013, p. 23-26.