The Organisation for Economic Co-operation and Development (OECD) recently released a guidance for the spontaneous exchange of information by no or only nominal tax jurisdictions.

As part of BEPS Action 5 to curb harmful tax practices, jurisdictions may only maintain preferential regimes if certain “substantial activities” requirements are met. In order to ensure a level playing field, these requirements must also apply to jurisdictions with zero or only nominal tax rates. As a result, the Inclusive Framework on BEPS decided in November 2018 to resume the application of the substantial activities requirement for no or only nominal tax jurisdictions. This will ensure that substantial activities must be performed in respect of the same types of mobile business activities, regardless of whether they take place in a preferential regime or in a no or only nominal tax jurisdiction.

Against that background, the new substantial activities standard for no or only nominal tax jurisdiction, requires them to spontaneously exchange information on the activities of certain resident entities with the jurisdiction(s) in which the immediate parent, the ultimate parent and/or the beneficial owners are resident. This information will allow the tax authorities of these jurisdictions to assess the substance and the activities of the entities resident in no or only nominal tax jurisdictions.

In order to ensure that these spontaneous exchanges take place in a coordinated and efficient manner, the guidance (also available in French) sets out the practical modalities regarding the exchange of information requirements of the Standard.

It contains guidance on the timelines for the exchanges, the international legal framework and clarifications on the key definitions in order to make sure that jurisdictions receive coherent and reliable information on the activities of the entities in no or only nominal tax jurisdictions and their owners.

It is expected that exchanges pursuant to the standard will commence in 2020.


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