Time not right for public registers of beneficial ownership, says OECD tax chief

15 Jun 16

It is not yet time to implement public country-by-country reporting for multinational firms or public registers of beneficial ownership, the director of the OECD’s centre for tax policy has argued.

Speaking at an evidence session for the UK’s All Party Parliamentary Group on Responsible Tax yesterday, Pascal Saint-Amans explained that some key countries are opposed to the idea and that the quality of data in registers is not yet up to the necessary level.

Saint-Amans said that big capital-exporting countries – namely Japan and the US – were against the concept of public country-by-country reports, which would see multinationals obliged to publish reports on their activities in every jurisdiction in which they operate, preventing opportunities for tax avoidance.

Campaigners have been pushing for such reports to be made public, rather than distributed only between tax authorities as is the current plan.

But Saint-Amans stressed the initiative wouldn’t work without these nations on board, and other countries would not be able to ensure the information being relayed to them by multinational companies was relevant and accurate.

Similarly, he argued the quality of the information that would stock public registries on beneficial ownership is not high enough.

“[A public] registry itself is not a solution if it is not properly fed with information,” he said, pointing out that a lot of the information in existing public registers is poor quality or has not been properly collected.

“That can do a lot of damage if you have a number of financial institutions relying on the register, and the same for the public,” he stressed. “I think the main challenge for today is how to ensure this information is properly filled in.

“We definitely need to improve and that’s the new challenge. Maybe we will end up with public registries, but before that we need to ensure that information is properly collected, all the checks are made, and it’s accessible. By jumping too quickly on the final product we should not forget about the different steps to get there, and there is a lot of work to do.”

Responding to a point raised by an audience member, who highlighted that public scrutiny would likely provide the pressure to improve quality, Saint-Amans said he was not confident this would happen.

“I don’t disagree that publicity will apply some pressure, but it will not be good enough,” he said.

Saint-Amans also responded to some common criticisms of the OECD’s Base Erosion and Profit Shifting (BEPS) project, which outlined a number of recommendations meant to overhaul the international tax system and prevent tax avoidance by multinational companies.

The first relates to the project being merely a “sticking plaster” for problems in the system. Pascal disputed this, highlighting a recent warning by Wall Street that the BEPs project may hit profits. He said this demonstrated the OECD’s work was having an impact on firms.

Another criticism is that the BEPs project has only introduced more complexity and uncertainty in the system, creating new loopholes to be exploited, deterring investment and harming businesses.

Responding to that, Saint-Amans acknowledged uncertainty was created. He said: “If we provide full certainty to taxpayers, then we reopen the ability to plan, because if you know where the line is you can go beyond it.

“So there is a degree of uncertainty that is created [with BEPS], and this is exactly to make taxpayers more responsible. I think this is not creating the opportunity to plan, but to be more conservative. This complexity is about uncertainty, not creating loopholes.”

BEPs recommendations, which were finalised last year, are now in the implementation phase. Saint-Amans said, along with other developments over the last eight years, there had been substantial progress in combating international tax avoidance and increasing transparency. 

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