This lesson examines the mechanisms of spontaneous exchange of information on tax rulings and the mandatory disclosure of aggressive tax planning arrangements, which are critical tools for tax administrations to detect and address BEPS risks.

Detailed Notes:

• The BEPS Action 5 Minimum Standard: Under the BEPS Action 5 minimum standard, members of the OECD/G20 Inclusive Framework have committed to counter harmful tax practices with a focus on improving transparency . One part of this minimum standard is the transparency framework for compulsory spontaneous exchange of information on certain tax rulings .

• Scope of Rulings Exchanged: The exchange on tax rulings is a critical tool in improving access of tax administrations to information relevant to assess the corporate tax affairs of their taxpayers and to efficiently tackle tax avoidance and other BEPS risks . Over 140 countries and jurisdictions participate in the Inclusive Framework on BEPS and take part in the peer review process to assess their compliance with the transparency framework .

• Scale of Exchanges: As at 31 December 2023, over 26,000 tax rulings in scope of the transparency framework had been issued by the jurisdictions being reviewed, and over 58,000 exchanges of information had taken place . Approximately 4,000 exchanges were undertaken in 2023 alone .

• Mandatory Disclosure Rules (MDR): The OECD has developed model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures . These rules require taxpayers and advisors to disclose cross-border tax arrangements that have certain characteristics indicative of aggressive tax planning or tax avoidance.

• Peer Review Process: The peer review process assesses compliance with the transparency framework, focusing on five key elements: information gathering process, exchange of information, confidentiality of the information received, statistics on the exchanges on rulings, and transparency on certain aspects of intellectual property regimes .