In a bid to reassure business leaders and tax experts gathered at the Public Accounts Committee's (PAC) tax conference today, Grace Perez-Navarro, deputy director at the OECD, has said the organisation's action plan to reform global tax rules 'is not an anti-business agenda'
Addressing the audience of over 200 delegates - including senior lawyers and heads of tax from Rio Tinyo, Royal Dutch Shell, Asos and Reed Elsevier - Perez-Navarro said that plans to reform tax rules - the so-called base erosion and profit shifting (BEPS) action plan concerned a broken system that business was using.
'We need to try to fix the rules that they are using to address unintended results and mismatches, she said, referring to hybrid mismatches in corporate tax as a result of aggressive tax planning by multi national entities.
'We need to achieve coherence in the international context so that there isn't only tax control on one side of the transaction - we need to bring countries together to restore coherence,' she said.
Earlier in welcoming delegates, Margaret Hodge, chair of the PAC, cited the Patent Box relief as one which needed further scrutiny.
'Like many other countries, however, the UK government has found it hard to resist the temptation to engage in a race to the bottom on tax. For example, its Patent Box tax relief, designed to encourage innovation, has come under investigation by the European Commission as a potential harmful tax practice.
'The success of international efforts to tackle tax avoidance depends on all countries being prepared to play by the same rules, and not adopting a two-faced approach where they sign up to OECD standards in principle, but try and undercut one another in practice,' Hodge said.
As BEPS is implemented, Perez-Navarro said she expected it would also 'increase certainty and predictably' of the tax system.
However this could also, she warned, lead to an increase in disputes.
'As the rules change disputes will increase as businesses will want to have greater certainty especially in specific cross-border transactions, so dispute resolution needs to be strengthened,' she said.
Referring to OECD research she said that developing nations were especially reliant on tax collected - 88% of Nigeria's tax base constituted multinational tax contributions while 26% of Peru's GDP is based on the same.
'Shortly we will be strengthening the engagement of these countries. And we will also be engaging regional tax administrations so that the rules reformed are not just for the benefit of developed countries,' she said.
