As tax administrations and international economic organizations reach consensus for implementing international measures that will promote tax transparency amongst the business community, uncertainties rise around the scope and extent of some of the action points proposed to drive tax transparency between jurisdictions. For example, the implementation of Action plan 13.
Action plan 13 of the OECD’s BEPS initiatives addresses ‘Guidance on the Implementation of Transfer Pricing Documentation and Country-by-Country Reporting’. The aim of this action plan is to enhance transparency for tax administrations by providing them with adequate information to conduct transfer pricing risk assessments and examinations. To tackle these issues, Action plan 13 introduced a four-tiered approach that should allow tax administrations to compile relevant data on how multinational companies allocate taxable revenues and liabilities across the various countries where they operate: Tier 1) a Masterfile, Tier 2) a Local file, Tier 3) Country by Country reporting (CbC) and Tier 4) Local transfer pricing forms.
A total of 44 countries are participating in the BEPS project on an equal footing. Within these group of elite countries only a few are in Latin American (LATAM) – Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico – each having a different degree of involvement in the implementation of BEPS initiatives. Thus far only Mexico has recently proposed the introduction of specific BEPS initiatives relating to Action plan 13 in its tax system that if approved would take effect as from 1 January 2016. Considering these facts, what can be expected from these countries and from other LATAM countries in the context of Action plan 13? Your organization may probably be asking the same question.