International co-operation on taxation with a focus on base erosion and profit shifting is one of four priorities on APEC’s financial agenda that has received broad support from member economies and international financial institutions. Việt Nam News reporter Mai Hương speaks about this issue with Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration of the Organisation for Economic Cooperation and Development (OECD).
Can you tell us some of the developments that have taken place in terms of tax co-operation in the region?
Việt Nam has been putting tax issues high on the APEC agenda, which is good, because that is exactly what all the other countries are doing in the world, particularly G20 countries. This will put the APEC group at a level playing field with other countries.
In tax co-operation, the achievement is that almost all APEC economies are members of international tax groups. We have a global forum on transparency and exchanging information for tax purposes to crackdown on bank secrecy. Almost all the countries are getting that; Việt Nam, not yet, but the Vietnamese Finance Minister reiterated at the APEC Finance Ministers’ Meeting that the country will be open.
We have an inclusive framework for fighting base erosion and profit shifting (BEPS) of which Việt Nam is a member. As of last June, we had over 100 members.
We are working to get all the countries function under the same principle. It is extremely important that countries follow the same tax principles for domestic resources mobilization; some of these cover elimination of disputes between countries when there are double taxation cases. This (having a uniform principle) is also good for business.
As a member of the BEPS framework, what are your comments on Việt Nam’s contribution to implement this initiative in the region?
This is about protecting the Vietnamese tax base by fighting treaty shopping. (Treaty shopping generally refers to a situation where a person/company, who is resident in one country and who earns income or capital gains from another country - source country, and is able to benefit from a tax treaty between the source country and a third country.)
To do this, country-by-country reporting is introduced, so that you know how companies operating in Việt Nam are making their tax plans and how this can be adjusted.
Pushing this initiative in APEC is very good for co-operation. At APEC meetings, OECD and the World Bank are working with all APEC economies to help tax administrations enact legislation; to help parliaments work on this, so that you can protect your tax base while playing by the same rules as the rest of the world.
Good companies need certainty and they need to play with the same set of rules. What you need is to protect the tax base, to raise the right amount of taxes and not be subject to double taxation.
The BEPS framework encourages members to exchange information beyond tax administration agencies. How can we do this?
It’s not easy but we are doing it. Automatic exchange of information has happened. We have provided all countries in the world (146 members of the global forum on transparency) with tools to exchange information to co-operate. That’s why it’s so important to be part of that exercise.
For co-operation between tax administrations, they need to know each other, they need to have the same tools. OECD is providing the tools and platform for tax administrations to meet, as also the IT (information technology) platform for them to exchange information.
It is good news that co-operation is happening in the region and it brings tax administrations on a level playing field with tax payers, including multinational companies. Tax administrations are local, tax payers are global and it’s very important for the former to tackle this situation by co-operating with each other.
What should Việt Nam do about profit shifting?
There’re some initiatives to strengthen regulations and we have discussed this with APEC finance ministers who are calling for assistance in terms of enacting legislation, in terms of helping Việt Nam sign multilateral instruments. These are the grounds for co-operation that is taking place.
We’ve heard that in 2018, there will be some changes in Vietnamese laws, and we will be here to help the Vietnamese Government move in that direction. This is very positive development. – VNS