On March 18, 2017 the OECD and the IMF released a IMF/OECD report for G20 finance ministers on tax certainty. The report responds to the request from the G20 Leaders at their Summit in Hangzhou, China in September 2016 for the OECD and the IMF to work on issues of tax certainty.
The report explores the nature of tax uncertainty, its main sources and effects on business decisions and that the report outlines a set of concrete and practical approaches to help policymakers and tax administrations shape a more certain tax environment. It draws on the experience of the IMF and the OECD and on input received by the OECD from businesses, tax administrations and civil society. The report provides new information from an extensive global survey by the OECD of more than 700 businesses—representing annual turnover of more than USD 17 trillion and companies headquartered in 62 different jurisdictions—and a survey of 25 predominantly G20 and OECD tax administrations. It is recognised that surveys of this kind need to be interpreted with caution. Narrative evidence, from a new IMF dataset, is also presented on the frequency and pre-announcement of changes in corporate taxation in twelve advanced countries.
According to the report while the sources of uncertainty are many and varied, the key findings from the surveys are:
· According to businesses, issues related to tax administration were ranked as among the major drivers of uncertainty in tax systems.
· Concerns over the inconsistent approaches of different tax authorities towards the application of international tax standards ranked high in the business survey.
· Issues associated with dispute resolution mechanisms, including timescales, were also identified as an important driver of uncertainty.
· Tax administrations identified taxpayer behaviour as an important source of uncertainty, in particular as a result of aggressive tax planning and a lack of cooperation. They also highlighted complexity in legislation, lengthy court procedures, unclear drafting and frequency of legislative changes.
· A key area of agreement in both surveys was that legislative and tax policy design issues are a major source of tax uncertainty, mainly through complex and poorly drafted tax legislation and the frequency of legislative changes.
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