Elizabeth Stevens Weighs in on BEPS and OECD

Tax Notes

Over 10 years ago, the U.N. said it wanted to tax the internet. The organization had a straightforward tax in mind, preferably a small levy on all data sent through the internet. The idea was that the tax would impose minimal costs on individual users but rake in billions of dollars around the world. Those proceeds would pay for internet development in poorer regions.

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“In what other sector is the OECD as an organization so important? I don’t think in the trade sphere, certainly not for peacekeeping,” Caplin & Drysdale Member Elizabeth Stevens told Tax Notes. “I don’t think the OECD is the key player among international organizations in any other area aside from tax.”

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Then came BEPS. In 2013 the OECD decided to address BEPS via a massive package of 15 action plans tackling the digital economy, transfer pricing, and more. At first, BEPS was a collaboration between the OECD and G-20, but the project later opened up to any country that agreed to adhere to BEPS standards — that new coalition became the OECD/G-20 inclusive framework on BEPS. Was BEPS a success? In some ways, yes. “There were countries participating in the OECD dialogue through what is now the inclusive framework that had always been rule takers, they were never rule makers, but now they had a voice in the rule-making process. And that new inclusiveness makes a big difference,” Stevens said.

“While not every one of the BEPS reports is a clear, cogent, and easy read, I think a lot of the work the organization did was really superlative, given that it was able to get consensus on those documents from such a large group of countries,” Stevens said. She also pointed to the scores of minimum standards, best practices, and recommendations that came out of BEPS as a sign of the organization’s capability and effectiveness.

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“With BEPS we had defined actions: Here’s the problem, here’s what we’re going to do about it. Now we have something where not everyone even agrees on what the problem is. I think the OECD Centre for Tax Policy and Administration would benefit from more defined, focused projects that leverage its technical expertise,” Stevens said. “Historically, there’s been a policy decided within the G-20 or among various countries, and the OECD gets a mandate for technical implementation. This time they’re tasked with coming up with a policy and brokering agreement on it in addition to working out the technical details. That’s a pretty tough job.”

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