The Philippines and 14 other developing countries have started to beef up efforts aimed at plugging tax leaks across borders under the auspices of a project spearheaded by the Organization for Economic Cooperation and Development (OECD).
On its website, OECD reported over the weekend that revenue officials from the Philippines, Albania, Azerbaijan, Bangladesh, Croatia, Georgia, Jamaica, Kenya, Morocco, Nigeria, Peru, Senegal, South Africa, Tunisia and Vietnam as well as the African Tax Administration Forum met last Dec. 10-11 at the OECD headquarters in France to discuss the enhancement of their engagement in the Base Erosion and Profit Shifting (Beps) program.
The Beps initiative “aims to create a coherent set of international tax rules to end the erosion of national tax bases and the artificial shifting of profits to jurisdictions solely to avoid paying tax,” according to OECD.
Last month, OECD announced that the Philippines was one of the 10 developing countries that would participate in the meetings of the Committee on Fiscal Affairs (CFA)—the key decision-making body of the Beps project—as well as its technical working groups beginning January 2015.
During last week’s first Beps technical meeting for partner-countries, the representatives from the developing nations “agreed on the pressing need to reform the international tax rules ‘as soon as possible.’”
The revenue administrators also discussed key strategies in order to gain the support necessary to ensure an effective implementation of the Beps measures, OECD said.
“Participants noted that capacity building shall focus on practical guidance on implementation and administration, and welcomed the preparation of tool kits in a number of areas of the Beps project, as well as related issues which developing countries have identified as significant, such as wasteful tax incentives and availability of quality comparability data for transfer pricing purposes,” OECD added.
Nonetheless, the developing countries noted that they needed to strike a balance in terms of implementing stricter tax compliance as well as intensified collections of corporate income taxes, while at the same time providing a fiscal regime conducive to generating more foreign direct investment, OECD said.
Last month, the Department of Finance said that the inclusion in the CFA of OECD’s Beps project “places the Philippines at the forefront of the joint effort from both developed and developing economies in addressing troubling trends in unfair and unjust tax avoidance and evasion.”
For her part, Internal Revenue Commissioner Kim S. Jacinto-Henares said in November that through this initiative, OECD and its partner-developing countries “can address a fundamentally unfair practice where multinationals make a huge profit in countries they pay little to no taxes to.”