- Good evening everyone.
And welcome to the New York
University school of law.
I know many of you, but not all.
I am David Rosenblum.
I am the director of the
International Tax Program
and this is our,
I'm happy to say this is the 20th year
of the international tax program.
We're very happy very fortunate this year
for our Tillinghast lecture to have
a Pascal Santemor as our lecturer.
As you doubtless know,
many of you know, the Pascal
has accomplished what is
pretty close to a miracle
by steering the BEPS project.
The base erosion and profit
shifting project of the OECD,
through a three year process
to completion recently,
and approval by the G20
in Lima just last week,
where I understand that
14 finance ministers
showed up to bless this project,
which is I think, really
quite astonishing.
And I can say from personal experience,
speaking on this subject
literally throughout the world
that whatever else can be said about,
or it should be said about
or will be said about BEPS.
It has captured the attention
of millions and millions
of people and in my view
is the most significant development
in international taxation
and in many decades.
So we owe a great
a debt of thanks to Pascal
who has already been with
our students at lunch today.
I can tell you his presentation
is gonna be fascinating.
Pascal comes,
is of course, French, he came from
the École nationale
d'administration in Paris
and was a member of the
French tax administration
for many years before joining the OECD.
He was appointed, I think
it was three years ago,
he got involved in with the BEPS project,
and he has been singlehandedly
the person behind it
from its inception.
So without any further
words of introduction,
I am gonna turn the
microphone over to Pascal.
And like all of you,
I'm looking forward to
hear what he has to say.
(handclaps)
- Good evening. Thank you.
I'm very privileged and
happy to be with you tonight.
As a French man, they
are impressive to be here
at New York University.
I'm not even graduated in law, so I mean,
(laughs)
addressing you is quite a
challenge and it's quite exciting.
So thanks a lot for the invitation.
As you've said,
it could sound like these conference,
this lecture, is timely
because we just delivered
the BEPS package.
Last week it was on
Thursday, we had the dinner
with G20 finance ministers and on the menu
they had BEPS.
(laughs)
and they seemed pretty happy.
The Turks were sorry
because the catering company
was enabled to deliver food,
we delivered BEPS and
they were very happy,
so happy that the day
after on Friday morning,
we planned a press conference
with the G20 presidency,
the Turks, the secretary
general of the UECD,
the incoming presidency,
which are Chinese.
And then we received emails of a nights,
"Well, my minister will come."
And then shortly well, "I becoming."
And then some others.
So I spent the night
looking after the Peruvian,
changing the stage and making
sure they would be around
for Mr. Scheu Blur with his wheelchair
coming up to the Chan.
We had 14 ministers present
at the press conference
to say how happy they were with this work.
So, that was quite nice.
But is it timely to talk about that now?
I wonder actually.
I wonder because we know
what we've delivered,
but we don't know yet about the impact.
We don't know yet about
the implementation.
We don't know yet whether
in five years time
people will look at it with
a smile of Denon to say,
"Well, that that was a nice try
but didn't change anything."
Or, "Well, they did awful thing
and the world has collapsed?"
Some things. So I don't, but maybe.
Or, I mean that was just
a nice step forward.
But now we've completely
changed with unit for taxation,
which has been agreed by two
to 200 countries, unlikely.
But who knows.
So, it's timely to talk about these spurts
but also not that timely.
Not to mention the fact that
it deprives you of the debates,
the real debate in as Vegas tonight.
But you can record it and
watch it later I suppose.
So, as we're too much, I mean
took to close to the event.
What I would like to do today,
and that's why I asked to add to the title
the reference to exchange of information,
not to lecture you about Fatcha Manal
did it brilliantly last year,
nor to talk about, to grow things.
But just to try to have another view
of what has happened over the past five,
six years in the
international tax environment,
which I think will translate
in a real change of environment.
Something like a new architecture,
whatever we think of BEPS,
what did we think of
exchange of information.
There will be some major
architectural changes.
And that's what I would like
to discuss with you tonight.
I mean Itach Greenburg
who's here mentioned that
in an article,
the new international tax diplomacies
or maybe I'm the new
international tax diplomat.
But for sure there is something new that
we collectively need to
understand to see what I mean,
what are the best things we
can draw out of that then.
And to start with,
I would like to raise a paradox.
I will quote a French
philosopher (Jshonje Kucsu)
and I will do it in French.
(foreign language)
I'd rather like paradoxes
rather than prejudices.
And that's so true.
So one of the paradox
is how come in the world
where you have increasing tensions?
I mean, look at the geopolitical situation
doesn't look good. I
mean, it's pretty gloomy.
At that time, you've never had
such a degree of cooperation
of Goodwill, of States, of
countries which are so different
on the topic, which is at
the core of sovereignty.
And I think that's a big question.
I'm not sure I have the
right answer to that,
but for sure it's striking
that we've been able
for the past 10 years,
to put an end to bank secrecy to organize
massive tax cooperation across countries,
that we now are able
to come up with a plan.
And again, whether we like
it or not, we do have a plan.
We do have a package of agreed measures
by all the G20 countries,
all the OECD countries,
that's 90% of the world economy.
And I should say a number
of developing countries.
And I hear some critics saying,
"Well, developing countries
have not been involved.
They have not had their
say in this process."
I can tell you that in practice,
they have been queuing
to join this process.
And they're arguing to join this process.
They want to be involved,
they want to have their say.
But they have had their say.
We had more than 18 developing countries,
or non-OECD, non-G20 countries
involved in that process.
62 countries have agreed the BEPS package,
and many more are supporting it.
So how come in this
increasing tense world,
have we been able to achieve these?
That's what I would like
to drive you through.
And the first act of these play,
I mean it's a three act play.
So the first one is
about the shift from the
G7/OECD world to the G20 OECD plus world.
And that was about
exchange of information.
International tax has for a long time
been in the hands of techies.
I mean you tax lawyers,
we tax administrators
from different governments
and we were happy to meet in Paris
from time to time,
at the committee on fiscal
affairs or at some back meetings.
And nobody understood
what was being negotiated
and in different treasuries,
I mean the people in charge of real stuff,
the domestic stuff, we're
looking with some envy
and jealousy the people going to Paris
to go shopping and negotiate obscure stuff
on transfer pricing and tax treaties
for a model tax convention
that would be translated into
20 years time through
bilateral negotiation.
So that was quite a sight.
And this was about,
I mean, the rules that we
will know about tax treaties,
transfer pricing is based
on the model tax convention,
the OECD model tax convention,
drawing on the league of nation
model tax convention back to the 1920's.
And it was not that sexy to say that
we were working on the model,
which was first elaborated in 1928, right?
And that was the life of
international tax lawyers.
And suddenly, you have all these on the
front page of the main newspapers.
I mean, last week we did the front page
of the Financial Times, on
the Wall Street Journal,
on the French Le Monde,
and some of the papers across the world.
So international taxes is
getting sexy, how come?
And unfortunately the answer is
because of the financial crisis.
I mean the worst crisis ever,
which has brought the
politicians back to tax policy.
And I know some are very unhappy.
I've read the number of articles,
so I heard a number of people saying,
"How come, I mean, we now
have finance ministers.
I mean caring about about tax policy.
I mean, they should leave
that to tax specialists,
not for politicians."
And I think it's deeply wrong.
I mean, this is about politics.
This is about policy,
this is about ministers.
And the financial crisis has been able to
bring them back there
for very simple reason.
We're back in 2008,
and we have the Lehman Brothers collapse
and the governments across
the world have to put
hundreds of billions of dollars or euros,
just to save the banks.
And at the same time, you
have a number of scandals,
the big one being the
(Lee Shang Stang) scandal,
the LGAT scandal.
You may remember a morning,
of Saint Valentine's in Germany
to the CEO of Docia Post
is wakened up by the police and the TVs,
which is not a nice way to be waken up.
And and he's arrested because
he stashed few billions
or hundreds of millions, I
don't know, in Lee Shang Stang.
And this started a big scandal,
which drew the political attention,
which turned into pressure
after the collapse of Lehman Brothers.
So, that's the story.
Why did the scandal work?
Cause you have scandals everyday.
I mean on the large scale basis.
But this one did work,
and I think it worked
because February aways comes
after August 7th,
where you have the subprime
crisis which starts,
where you have some doubts,
being instilled in the mind of Politian
about their relationship
with the financial industry,
about the role of the financial industry.
And they have their doubts,
and then they suddenly realize
they we'll have to put
a lot of public money,
taxpayers money to save the banks.
And they say,
"Well we cannot do that in an environment
where we have high net worth individuals
defrauding us massively,
because of the use and
the abuse of bank secrecy.
We need to do something with that."
And it started in Washington
on the 15th of November, 2008
where the G20, even before
the OECD was trying to get
in the G20 circle,
the G20 told us please work
on the end of bank secrecy.
And that's what we actually managed to do
quite quickly with a list
which was established
for the following summit of the G20,
which was held in London
on the 2nd of April, 2009.
And that was for good and bad reasons.
The good reasons are
those I've just indicated,
the bad reasons I think
where the governments
didn't really know how to
handle the financial crisis.
And when you have a scapegoat,
that everybody understands about,
you use that scapegoat, the tax havens.
And the French president at
that time, Nicolas Sarkozy,
he was very good at that.
I mean, I don't know how
to handle the situation
that's beat on them.
I mean, at least they
know why we beat them,
if we don't really know
why we are doing it.
And that's exactly what happened.
And this translated
into the end of bank secrecy,
At least exchange of
information on requests,
which then translated into
automatic exchange of
information thanks to the
fantastic typically American
unilateral extraterritorial legislation.
(audience laughs)
The U.S are fantastic
about that, you know,
what is good for me may
not be good for you,
but please implement.
(laughs).
And it works.
And of course then you had
what they call themselves,
the G's, you have Gs everywhere.
So you have a G5,
I don't know if you knew about the G5,
I mean the the the European countries
which think they're big
UK, Germany, France,
they are big please. I'm French.
(laughs)
Italy and Spain seeing,
I mean fat guy first they
didn't believe in it.
I mean, is it not possible?
And then the woke up, they say,
"Well, they are going to kill our banks
when we give all the
information to the U.S.
do we want to protect our banks.
And to do that we need to
have agreements with the U.S
and by the way, as the U.S is not
100% sure on how to implement FATCA,
maybe we could negotiate
some form of agreement,
like routine, natural
competent authority agreement,
which will allow us to comply.
I mean, give them the information
so that our banks will
be deemed compliant."
That was the first step of the thinking.
The second step of the
thinking immediately was,
and by the way,
he Swiss are going to give
information to the U.S.
We want multi literalize FATCA.
and they turned to the OECD
because we had the expertise,
we were there, we did the blacklist
of the tax haven back in 2009,
and we were available to
provide the infrastructure
to provide the, I mean the
skills to put that in place.
And that's,
that's what we did and that's
how we ended up in 2013
with a mandate of the G20 to do a
common reporting standard,
which we delivered in 2014.
And that we established,
a world wide standard,
largely drawing on
FATCA, but you see that,
it has been an interactive way
from the G20 saying,
"We need to put an end to
bank secrecy through FATCA,
which actually facilitated things.
But with the international
community deciding to cooperate."
One thing which facilitated our work,
like not necessarily
having very proud of that
is that the dividing line
was between the very big guys
and the very small guys.
You know, you had the high tax countries,
which are big countries,
and then you have tax havens,
which are small jurisdictions.
And when you have all the
big guys ganging up with you,
to say, "You guys, you need to do that."
And you're very small, you say,
"Yes sir."
And you move and this
is what has happened.
And that's why there is some resentment
from the small jurisdictions.
But at the same time,
what we offered them was
to level the playing field,
and that's where we moved from an OECD G7
type of environment, where
we started in the '90s
the work on harmful tax practices,
which had not been successful
because the small jurisdiction said,
"Well, I mean please clean
up your own house first,
talk to Switzerland, talk to Luxembourg,
talk to some others before
telling us what to do."
And the OECD member countries then
we're a bit short of a response, while
with the G20 and all countries moving,
we've been able to offer
leveling the playing field.
And that's what we establish
as soon as September, 2009
with a global forum on transparency
and exchange of information
for tax purposes.
We were able to bring all the countries
and the jurisdictions,
on an equal footing for the implementation
of the worldwide standard,
which had been agreed.
I think that was the
first time we did that.
And that worked.
And that worked because you had
the good conjunction of factors.
You had the G20,
I mean I borrowing from the
G20 is having an impact,
believe it or not.
Then you have leveling the playing field
and at some point you have
the small jurisdictions
calling me and say,
"Well you're doing the
review of that other
small offshore jurisdiction,
please check these
because the IBCs has tripled
in in six months time.
So very important that
you check this out."
And then you have all
the G20 finance ministers
pushing for these,
and the countries on an
equal footing and it worked.
So we've moved from a G7
OECD cozy environment,
but not functioning that well,
to a G20 OECD plus environment
which actually delivered.
And what did deliver?
It did deliver changes,
not reports, not talks,
but actual changes with
cash coming in the coffers
of the member countries.
(coughs)
We are now more than 37 billion euros
which have been collected by the member
and the nonmember countries.
I even saw last week that the Fiji's,
they have passed the legislation for
a voluntary disclosure initiative,
meaning that the benefit from
this new transparent environment.
And when you deliver cash to governments,
which are short of cash,
they're appreciative.
And that was the first act of this play,
which actually has been successful.
So we said,
"Well, let's move to the next step."
The next step is about
the tax haven issue.
You know, the tax haven issue
as we described it back in
in 1997, 98 with a report
on harmful tax practices
was about one, lack of transparency,
lack of exchange of information.
But second,
and that was a bit of
an awkward definition.
No real activity, zero
tax and no real activity
plus lack of transparency
there was a bit clear.
So we did tackle some harmful
tax practices here and there,
but we were left with something,
nobody was really able to
define and even less to tackle,
which was how can we have a world
where the activities are
taking place in the countries
where you know that people are employed
or the sales are taking place,
and the profits being in jurisdictions
where actually you
wouldn't expect them to be.
I always quote the $2 trillion U.S
stashed in Bermuda.
I mean that's a fact. Is it not?
I don't know whether it's 2 trillion,
one point something.
It's a lot of money, you know.
And it's very hard to
explain why it is the case.
It's very hard to explain why 27%
of direct investment to
India comes from Malicious.
I love the Malicious, they are
very, I mean entrepreneurial,
(laughs)
but still,
I mean 27% of direct investments,
you see that there is a problem.
I love the Dutch.
I love the Netherlands.
An official report from
the Netherlands government
indicated last year or two years ago,
that we had on average 10,000 tax lawyers
living on treaty shopping.
I'm not saying 10,000 tax
lawyers in the Netherlands.
10,000 tax lawyers in the Netherlands
living on treaty shopping.
Which is a lot of people.
I love Luxembourg.
And they've been so
successful at issuing rulings
so many rulings that one time,
once the French director of French I mean,
the French tax director of
a French company told me,
"Well, I have a ruling which was issued
with a condition that it
shouldn't leave the safe."
So, it's in paper and it
shouldn't leave the safe.
Maybe there was something
wrong about all that.
So, as we had been successful at dealing
with exchange of information,
we thought that maybe
it was time to tackle
the other aspects of the tax haven issue.
Recognizing that that
was much more difficult
because the dividing line was not about
the big guys and the small guys.
So it would require a much
more sophisticated approach.
And more fundamentally,
I think there were some short-term trends,
just defining action
and longer-term trends.
On the short-term,
of course, we all had in mind
the stories by Jesse Drucker
or some others seeing that
there were some international,
large multinational
companies being actually
very little on foreign income.
And these had became a real
front page story.
So you had I mean some
political dimension there.
The man or the woman in the street
had heard about some companies
not paying much taxes
at a time where corporate
income tax for small and medium
sized companies at the time
were a personal income tax
for many individuals at a
time where value added taxes.
So I know it's an American audience,
and I have to explain you VAT.
It's a consumption tax.
(laughs)
You may heard about it one
day here in this country too.
So VAT has increased in 27,
out of 33 OECD countries having VAT. Okay.
And it hits, it hits badly the people.
And at that time you see
that the big juicy companies
don't pay much, if any.
And you have a political issue,
especially at the time where
the trust in governance
is collapsing.
I mean, you have populist parties
emerging everywhere and
taking over in some countries,
not talking about the U.S of course,
but in many European countries,
it's happening.
So the lack of first by citizens,
the lack of trust by tax administration
was also another factor.
You know, when you're a tax administrator
and you lose all the
cases you bring to courts,
and I've been a great loser.
It may be. I still am.
But I've been a great loser
as the head of the tax litigation
of the French administration.
We litigated transfer
pricing stuff we lost,
we litigated commissionaire
arrangement, we lost.
And we lost because we were told,
"Well, the way the
transfer pricing guidelines
are written are searchers.
You cannot do that. You
cannot dispute this."
The way article five of
the model tax convention
is translated in the bilateral treaties
have been drafted is such that
you cannot lose the
commissionaire arrangement.
So, you have tax administration being
not only frustrated but doubtful
on the relevance of the
international tax standard.
And then you have all these
politicians wandering,
being under pressure by their people,
and they say,
"Well, I mean, why are we bound by these
international tax rules?
Who are these people at the
OECD to tell us what to do?
Why would we limit our sovereignty
when there is no reason for that?
Especially as the rules don't work well,
and therefore why don't we
take protectionist measures?
And that's the time where you had
the financial crisis hitting
and the need to take actions,
it's you're attempting to
take protectionist measures,
which would increase the risk,
which would harm cross-border investments,
but which would politically
give some satisfaction to the people.
You also had some longer-term trends
that were underlying the environment,
and which then justified action.
The first one is so obvious.
I mean the rules actually
dated back to the 1920s,
they had been designed in another world.
In a world where
globalization was marginal.
I mean, we had a few
multinational companies,
but there were no,
they were not the core
of the global system.
And with these globalization,
we definitely had to rethink
or revisit these rules.
Another underlying factor
is about this concept
of tax sovereignty.
But when you put tax
sovereignty on the one hand,
and globalization on the other hand,
you need to square the circle,
because all the countries are sovereign.
And that dates back to the,
I mean middle-age, that's
one of the legacy of
the war between the
French and the English,
in the 14th and 15th century.
Where the concept of sovereignty emerges,
and it emerges at the same
time as consent to tax.
Consent to tax because the governments
have to levy taxes to fund the war.
And at the same time you have
the emergence of sovereignty,
the emergence of consent
of consent to tax,
and tax will be at the
core of sovereignty.
And that's been the case since then.
But governments are sovereign.
The countries are sovereign
from a tax perspective.
They do what they want,
and they don't care about what
happens across the border.
Except that when you
have local governments,
and global businesses,
you may have gaps between
these sovereignties.
And you may keep your nominal sovereignty.
But what about the actual sovereignty,
where actually the profits,
or the high net worth individuals money,
will go to the interstices,
between the tax sovereignties.
And the financial crisis,
I think has been a wake up
call for the governments,
to tell them,
"Well, if you want to protect
your actual sovereignty,
you'd better limit the nominal sovereignty
through tax cooperation."
I would not use a four
letter word here in the U.S
which is regulation.
I think it's an awful word, right?
(laughs)
But in Europe that's
the word we would use.
We would say,
"Well, I mean with national sovereignties,
and globalization on the other hand,
you need some form of regulation,
but we can call it cooperation.
That's the same word. And
it's not afforded a word.
And bridging the gaps
between sovereignties
I think has something which
has come to the mind of these people
especially as we told them,
"Well, your choice is either you take
protectionist measures,
you move on your own and you
can do this, that's all right,
or you try to cooperate,
so that we can save the rules
to eliminate double taxation
because all these is about
the elimination of double taxation.
All this is about making sure
that we have an environment
where the investors can be secured because
the States decided when the
established corporate income tax
and personal income tax,
to limit the right to tax
so that there would be no double taxation.
That was a policy decision
that they took a long time ago
and that they should stick to.
And because of all these reasons,
I think we had the recipe
if not for success,
at least for further work to address
base erosion and profit shifting.
And then totally, I could
tell you that in 2012
when I was appointed director for
the center for tax policy and
administration at the OECD,
I had a new Bureau.
The Bureau is made of 12
OECD member countries,
representatives.
And we gathered, so it was a
new crowds and they asked them,
"What are you concerned about?
What would you like to work
on in the next three years?"
And all of them, including
the Swiss delegate,
who was the tax commissioner
at that time, said,
"We're concerned with base erosion,
and we're concerned with profit shifting."
And they're repeated that several times.
Base erosion, profit shifting,
base origin, profit shifting.
So I wrote it down BEPS.
I turned to a native
English native speaker,
"Four letter word, is it safe?"
"Yes, it's safe. You can go ahead."
(laughs)
And we decided to launch the BEPS project.
And then for many reasons,
I will not give the details of,
I managed to get that on
the radar screen of the G20
in Los Cabos in June, 2012.
Because we thought we
would have a few years,
I mean half a decade to work on that.
And you were remember that in November 12,
we did have a number of
G20 finance ministers
getting very excited with BEPS
because there was the Starbuck case,
there was the Google case,
there was the Amazon case in the UK,
and in some European country and say,
"We need to address that urgently.
Please do a report by our next meeting."
Next meeting was in February 13,
we did the report and say well actually
there is a real issue.
We cannot measure it.
We don't have the data.
But there is a real issue,
a number of people told us,
"Well you cannot measure it
because there is no issue.
Look at corporate income tax. It's stable.
So, it start declining,
so there is no (mumbles)
you're making it up.
Well, you may have seen through action 11,
that with the most conservative estimates,
we have an annual cost
for treasuries between
$100 billion to $240
billion a year, globally.
And I can tell you it's a
very conservative estimates
because our member countries didn't want
to show too big figures,
where actually the figure as a higher.
So we said we don't have the figures,
at that time we didn't.
But there is a real issue
and we need to tackle it.
And it told us,
"Okay, good. Please we want
to plan by our next meeting."
And then the meeting was in July.
So we did establish the BEPS action plan,
and the BEPS section plan was
about addressing this issue
in a way which would be a holistic manner,
consistently and comprehensively.
Cause we didn't want
just to close down a few
schemes known here and then,
we knew about a few schemes.
I mean, for half a decade we've
had tax inspectors
sharing information on the schemes
they did find when doing audits
and at that time I think
we had 300 or 400 schemes.
No, most of them being
just avoidance scheme,
I mean hybrid mismatches
or other schemes which were
familiar to the tax planner.
And then we're becoming
familiar to the tax auditors.
So we knew the schemes but we said,
"Well, what we need to
do actually is to draw
from the failure or have success
of what we did in the '90s."
And if we just closed down some schemes,
or if we ask countries to close
down harmful tax practices,
we won't do much,
especially as countries are sovereign
and they will keep the tax
competition among themselves.
Cause there, I mean there is no agreement,
no consensus globally on putting
an end to tax competition.
But what we need to put an end too is
this thing that nobody can understand
the profits booked in one jurisdiction
where nothing is happening.
Ad then we may have some form of consensus
because all the countries will agree.
Then they can fight again
on how to share that,
the Europeans and the Americans
and the digital economy income or
are the Americans and the Indians
and the Chinese on whatever,
or the Europeans or the French
and the Chinese on the
luxury goods, they can fight.
But for the time being,
I mean they fight for nothing
because it's elsewhere.
It's in tax havens.
So at least they should
all agree with that.
But, we also need to be
mindful of not designing
something that is implemented
by everybody or it's failure.
Because you know, I tend to think that
the legislative process in some countries
across the Atlantic from Europe
(laughs)
is extremely difficult.
So if we plan a big, again,
a big beautiful machine
where everything is
going to work perfectly.
If the U.S changes all this legislation,
well you can just stop and go back home
or go surfing or do another job.
So, we did engineer these in a way where,
we would not need all the countries
to implement all the actions.
First because you don't
want to rely on tax havens,
to implement so you want
to provide instruments
to the countries willing
to protect that tax basis,
so that they can do it
without asking for permission
from other countries.
Or actually you ask for permission because
you want to do something
which is cooperative,
which is collaborative,
which has been agreed by the others,
but you don't oblige the others to do.
Why would you impose on Switzerland
to pass a CFC legislation?
They're not interested.
They may not implement it properly.
Why would you do that?
Why would you ask Bermuda or
the Bahamas or some others,
to install a corporate income
tax? They don't want it.
That's their sovereignty.
But what you want to make sure is that,
if you're not happy with profits
booked in a cashbox in
Bermuda or elsewhere.
You have the instruments
to neutralize that,
and that's the way it's been engineered.
Second, we're not completely
naive so we knew that,
I mean, the tax planner
industry is brilliant.
I mean, they learn in
the best Universities,
(Laughs)
including this one, right?
And we had to make sure that
we would have the convergence
of different instruments
just to make sure that we would neutralize
the schemes we wanted to neutralize.
And that's how the 15
measures have been engineered,
through three pillars,
you know about them.
One is bridging the gaps between
the sovereignty and that may
be the most innovative one.
I know that there are
some doubts on whether
this will translate into anything.
And I do think that
this will translate into
more cooperation.
Countries can take the CFC legislation
enact the CFC legislations they want,
whenever they want.
They send that now, they have
agreed on best practices.
They can emit interested that
turbidity the way they want.
They don't need us.
But they have agreed on the
more efficient mechanism.
And you may have seen
that if they didn't say,
this is a minimum standard
because we all need to implement now,
and they didn't do so
because a number of countries
starting with the U.S are
not able to implement.
But they said,
"We want to converge."
Because many countries want
to move and they know that,
you know, they face the
first mover dilemma.
If I move on my own,
then I'm on my own and
nobody else move and
I lose the money.
Canada. So Canada say,
"Well, okay, we'll move together.
We want convergence,
interest deductibility."
And also we kept, I mean the
harmful tax practices work
together with something quite innovative,
neutralizing hybrid mismatches.
We've all talked about arbitrage
for the past 20 years now,
we provide countries with
a muddle tax legislation
or model treaty provision,
to put an end to these arbitrage.
And I can tell you that
countries will implement,
they are implementing.
The challenge we had was not
to convince countries to implement,
but to hold them on. Say,
"Please wait. I mean the
UK don't do the DPT now,
and don't do the DPT at all."
(laughs)
Drawn on what's been agreed there.
The countries are moving,
and they are converging into the (damage).
And that was the first pillar.
And this is quite innovative.
That's the OECD dealing with,
how do you breach the gaps
between these sovereignties,
how do you make sure that
one sovereignty will look at
what the others are doing,
to decide on how to deal
from a tax perspective
with an element of income.
The second pillar was about
fixing the international instruments
as they are tax treaties.
I mean the commission, they arrangements,
everybody wanted to put an end to that.
The fragmentation of the
permanent establishment.
There was consensus that
it needed to be fixed.
The fact that in today's economy,
the fact that you have a delivery
and a storage in one country,
does not constitute a
permanent establishment
is a bit weird to explain
to common sense person.
So, we've moved there.
But also the treaty shopping.
I mean, treaties have not
been designed to be helped.
It's a simple as that.
They're are designed to
eliminate double taxation,
not to facilitate double non-taxation.
So we've said,
"Well we need solids. I
mean provisions there."
Of course the U.S has the LOB,
it works some other ones,
another method it can work.
It does work in the case
of the UK for instance,
so we have a minimum standard there.
And the countries in the course
of the, I mean work said,
"You know, it's not only a
model that we want to do,
we want to do more.
We do want a minimum standard.
We want to go further,
here we want to go further
on harmful tax practices.
On the automatic exchange of tax rulings,
on the nexus approach for Peyton boxes."
Let's be clear, we're not
advocating Peyton boxes,
and I know some of you
are making fun of me
to say the legacy of the BEPS project
will be to have Peyton
boxes all over the world,
including in the U.S,
maybe not the best outcome I must say.
But what we've said is,
Peyton boxes are not great.
They're pretty stupid from
a tax policy perspective.
But if you do them,
at least make sure that they
don't harm your neighbors
with a nexus approach.
So minimum standard
there on treaty shopping,
on permanent establishment,
fixing the rules.
Transfer pricing.
Here if I measure the
success of the BEPS project
to the criticisms we face,
I think we've been extremely successful
because we're attacked from
the left to the right's.
I mean everybody's unhappy.
So maybe we did something right there.
(laughs)
I mean the NGOs say that
without unitary taxation,
all these is a joke.
And then if it is a joke, I would respond,
"Fine, let's laugh together,
together and let's stop worrying about
corporate income tax."
Because you need for
taxation is not gonna happen
anytime soon.
(snezz)
Even in the European union.
Can we fix the system as is.
And I tend to think that yes, we can.
And I was struck by the fact that
our transfer pricing rules,
which seems so sophisticated,
you know, when you look at the
transfer pricing guidelines,
you find some real stuff for techies.
They are very primitive.
I mean, they didn't contemplate
most of the cases where
you just have the discrepancy
between the real activity
and the contracts.
And that's where you have a
number of tax lawyers saying,
"Well, I mean, just look at
the contracts full stop."
And I respond to them.
"You're the best advocates
of unitary taxation."
I remember a meeting I had in January 14,
in Palo Alto where I had the
tax director of a large company
explaining to me that we must
keep the arms-length principle
because it is the arms-length principle.
(laughs)
Huh?
- And that it was like this
and we couldn't change it,
otherwise the world would collapse.
And I said,
"Well, you're the best
advocate of unitary taxation."
We have a principle which is pretty weak,
but can work if you reconcile
the reality with the contracts
or the contracts with the reality,
which should be the
job of the tax planners
or the tax directors.
So we say, we need to
delineate the real transaction.
We need to look at who's
able to manage the risks.
And we've tried to anticipate the fact
that sending 20 people to Bermuda,
just to manage all the risks
of the company would not work.
I mean it's not as simple as that.
So we've been attacked by the NGOs,
we've been attacked by
the business community
telling us that the world would collapse.
And I just do hope that we have
slightly more sophisticated rules
which are bit less primitive
and which will just,
I mean make sense.
Cause what we had so far was nonsense.
The fact that you can have a cashbox
with all the intangible of a company,
where the R&D is done in Palo Alto,
where you have, I mean all,
all the value added done
by the real people somewhere
else than in the tax haven,
that just doesn't pass the test
for the minister of or
for the 12 year old,
doesn't make sense.
So, we've tried to address that.
Finally, the third pillar
was about transparency.
I know that transparency is
this type of words that all
the people will use and nobody
can be against transparency.
Right? Even though I have my doubt,
I don't know what
transparency is, after all.
The other day I was at a
meeting in the European Union,
and one guy was saying,
"Transparency's transparent to the public,
otherwise it's not transparency."
And they wondered all
the work we've done on
exchange of information,
the end of bank secrecy,
therefore is not related to transparency
because it's not public.
But it cannot be public.
So transparency from my perspective is,
transparency from the taxpayers
to the tax administrations.
And maybe the other way around as well.
And you know that there is
an action related to more
transparency from tax
administrations to the taxpayers.
And that's the action 14 on
mutual agreement procedures.
So, we wanted to increase transparency
there to provide more instruments
to the tax administrations,
the mandatory disclosure regimes,
the action 11 about
measuring the phenomenon,
having some indicators to follow these up.
And very importantly
and you know about that
the country by country reporting.
And this is an important piece
of information that the tax
administrations will collect
and they wish good luck
to the tax directors
when they will have to
explain to their CEOs
that all the turnover is in Europe.
All the employees are in China,
in the U.S and all the
profit is in a place where
there is no employee, no
asset, no turnover of any kind,
good luck.
So maybe that should be
an incentive to rethink
the tax architecture of the company.
You know that we've worked hard
to make sure that this would happen ,
and the countries were
all in agreement that
this should go to tax administrations.
Then there was a debate
on local filing versus
I mean headquarter filing and
we ended up with a
quite complex mechanism.
This mechanism will work
as long as all the countries implement
it's minimum standards.
Meaning that all the
countries must implement,
and we were relieved and satisfied
to note that the U.S
treasury and U.S IRS views
are that these doesn't require legislation
but can be done through regulation.
And this was confirmed by
Jack Loo, last week in Lima.
And I think that's very important,
especially if people want to resist
public country by country reporting.
Because if it doesn't work at some point,
you will have pressure.
In Europe the European parliament
is very keen on pushing for
public country by country reporting.
So just have that in mind in case
you have some lobbying
activities on the hill.
So, fixing the existing rules,
bridging the gaps between sovereignties,
increasing transparency are the
different pillars that
have been developed.
And I can tell you that bringing
all the G20 NDUECD countries,
plus developing countries
on an equal footing to discuss
all these in two years' time,
which was crazy,
and I know we've been
accused of just being crazy
and nuts to go that fast.
Has not been a picnic party.
You know, an easy a
picnic party. Not at all.
It's been very difficult.
But two comments there.
One is we have reached
a meaningful real agreement
on these measures by all
the involved countries.
I've read in the press that
this is not meaningful.
They don't even know what they agree upon.
I can tell you that they
know what they agree upon,
I can tell you that there
has been negotiation
between some which had conservative views
on transfer pricing for instance,
and some others which were willing
to tax much more at source
where the issue was not source residents
but again putting an end
to double non-taxation.
Real negotiation between economies
which have very different perspective.
And it has worked.
And what's striking is that today,
I can tell you that all
the G20 non-OECD countries,
for those of you who
are not that familiar,
we have Argentina, Brazil, South Africa,
Saudi Arabia, Russia,
India, China, Indonesia.
These are the eight
G20 non-OECD countries.
They want to remain at the
committee on fiscal affairs,
on unequal footing.
It's a no brainer.
We're here we stay, we get closer.
Of course they have different views.
Brazil in particular,
which is a Island in the
international tax world,
but they want to converge.
Three years ago, one dream that I think
collectively we would have had was to say,
"Well, we need our standards
to be as relevant as possible,
meaning as broadly accepted as possible."
We're there.
Now the challenge is to
get developing countries
fully on board.
But having the G20 is a no brainer.
It has happened. It's
here and we'll keep it.
So I think that's a significant
legacy from that work.
Act three, and I would stop here,
act three is about implementation
and it is to be written.
Because we have agreed to significant
change of the rules.
I think it's already having an impact.
Unless I'm just, I mean,
doing wishful thinking,
which I'm good at.
But we do have now a writing on the wall.
I mean, if you just wait for
all the legislations to change,
maybe you're not that smart.
Legislations are changing.
Country back and through
reporting is happening.
Transfer pricing rules have changed.
It has happened. That's real.
Tax treaties will change soon.
Not in two decades time.
We have a multilateral
instrument negotiation
which has started.
We're gonna have the second
meeting of negotiation in
two or three weeks time in Paris.
We have 91 or 92 changes
everyday countries,
which are participating
on an equal footing
to the negotiation of the
multilateral instrument.
I understand the U.S is now part of it.
This is significant.
Well, will the U.S ratify someday
a multilateral instrument?
Maybe be not.
But we don't need the U.S
because the minimum standards
on treaty shopping, the
U.S meets the standards.
Now, if the U.S wants to have arbitration
with 30 plus countries
at once, be welcome.
If you don't want that,
don't sign or don't ratify.
But it is happening and this will ensure,
I mean better implementation,
and faster implementation
for all countries.
And I mean increased
certainty for the taxpayers
because when you have treaties
which are being updated,
you have 3,600 bilateral treaties.
I never counted them.
So I rely on the figures
from the IBFD here.
But when you have that
amount of of treaties,
to change them it really takes many years,
and then you can do
other forms of arbitrage
or so between the treaties.
They will all change at once,
and we will complete the
negotiation by the end of 2016,
with many, many countries on board.
So things are happening, so
you'd better anticipate all that
and countries are
changing the legislation.
But, we also need now to engineer
the implementation phase.
How will we assist countries
changing the legislation.
That's something we're facing
on exchange of information.
The countries are coming to us and say,
"Well, how should I am
in my legislation here?
Or please put in place a
common transmission system."
So, we're getting in this
business of organizing
the real cooperation on the
ground between countries.
We also need to monitor,
to monitor the implementation
of the minimum standards.
All the countries have agreed,
and they are very concerned
about leveling the playing field
on treaty shopping or
harmful tax practices
or on whatsoever.
But we also need probably
to move away from the sexy,
from pages of papers to go back to,
I mean the real challenge,
which is proper implementation
by tax administrations,
the rule of law, making sure
that tax administrations
do not target rogue
because they now have
the right instruments
to adjust the taxpayers,
so that we have a cooperative
approach with taxpayers
and between tax administrations.
That's a big challenge ahead of us.
We've never worked at the OECD,
on how our transfer
pricing rules implemented
in practice in our own member countries.
Maybe we should do that
to identify the discrepancies,
and see how we can
improve stuff marginally.
So these are big things ahead of us
with another challenge,
which is that we need to be inclusive.
We've been willing to be inclusive.
And at the beginning we
wondered whether we should start
with 100 countries in this project.
But it you started with 100 countries,
you never land or you crash
because that's too many
people around the table.
That's why we had to start gradually,
and that's why we had
initially all the G20,
countries on an equal footing.
And the following year, 18
developing countries joining.
And now we are mandated
by the G20 to establish
an inclusive framework for implementation,
which will be some form
of global forum on BEPS
or something like that.
That may sound like a
nightmare for some of you,
but that's the future.
And now if we look ahead
five years from now,
what will my successor
for the 25th lecture say,
maybe he or she will say,
"Well, all that was very funny,
but actually without
formerly apportionment
doesn't mean anything."
(laughs)
And maybe by then we'll
move more profit split,
which is on the program for 2016.
Maybe some Michael Deveraux would say,
"Well, the only solution
is destination principle."
I mean, source residents
that's over without destination
and I don't know what it
is at the end of the day,
global VAT or something like that,
will not fix the problem.
- Yeah.
Maybe it's true, maybe not.
Or the digitalization of the economy,
the Uberization of the
economy as we see in Europe.
I don't know whether you see it here,
but that's terrifying in Europe.
Uberization of the economy.
I mean you lose all the
control on anything.
What will be the challenges?
The report on action one I
think is pretty much interesting
for us because it provides
some quick fixes to VAT
and to corporate income tax
through the definition of article five.
But it also says unlike what
we did in Taiwan back in 2000,
where we said,
"Nothing new. Near no way
subsidy, we don't need to change."
Here we say with better monitor,
we don't know what's gonna happen.
So we keep going on,
we have a few options.
These options are not consensual.
I can tell you that India says,
"They are consensus."
U.S says, "No, they're not consensus."
(laughs)
And there are a few options and there is
agreement on the need to monitor,
on the need to check this
out on a regular bases.
And so shall we be doing.
And finally I mentioned
inclusiveness a number of times
times, but we will have to
address the challenge of
developing countries and
that goes much beyond BEPS.
Tax incentives, for developing countries.
The indirect transfer of assets
when the mining industry sells some mine,
where are the capital gains taxable,
basic capacity building,
or the balance between source
and residents' taxation.
These are key challenges
for these countries
and there is full consensus
among foreign affairs people.
I mean the finance people
are very nervous there
but for in office people
in all the countries say,
"We need to put the emphasis on
domestic resource mobilization."
And I think we need to
be consistent there.
So we probably need to
revisit that with the IMF,
with the world bank, with the UN.
But that will be part of the landscape.
Now, I don't know,
I mean I don't know what people
will say in five years time.
I tend to think that
actually the landscape
will not be that different,
that things change gradually
and that in five years
time we will still benefit,
so to speak, from these BEPS projects
in the sense that we'll
have a broader community
agreeing on a common set of rules.
We'll have more cooperation,
more exchange of information,
tax administrations will
speak to each other,
will better speak to their taxpayers.
And I do hope that
taxpayers, tax planners,
will go back to business as usual,
or as usual as it was 20 years ago,
which is to plan to optimize,
to reduce the tax burden marginally,
but not to be a profit center,
but we'll see that in five years time.
Thank you very much.
(handclaps)
- Well, that is a tremendous
amount of food for thought,
I think for all of us,
including those of us who
followed BEPS pretty closely.
We have some time,
we've allocated some time for questions,
and there are microphones in the center,
so if anyone would like to ask Pascal
anything at this point,
now is the time to do so.
Everybody's bashful tonight.
Nobody has any questions.
There we go. Roy Burke, right.
- I'll be the one to to break the ice.
So Pascal the recent changes
to action item number five,
on harmful practices,
your requires a disclosure
of domestic rulings
that result in lower taxation
on international transactions
under certain circumstances.
U.S law has severe restrictions
on the exchange or the disclosure of
taxpayer information under 61O3.
To what extent does the
success of X number,
action number five,
rely on the exchange of that
specific taxpayer information.
- I don't know.
(laughs)
- Something is better than nothing.
- Action five. So there
are two Peters, right?
One is the transparency of tax rulings.
The other is the nexus approach.
On transparency of tax rulings,
we've identified six
categories of rulings,
which must be exchange.
Some may consider that
we go slightly beyond
what was initially agreed in 1998,
on the criteria of what is harmful.
But there is agreement.
The U.S is fully backing this action.
I'm not aware of any
problem that the U.S would
have to exchange the information
including even the six categories
which have been identified in the measure.
And you may have noticed
that the European Union
has already implemented these
and is fully compliant with the,
I mean, with the automatic,
with the spontaneous compulsory
exchange of tax rulings,
because they call it the automatic,
we call it spontaneous compulsory,
but that's equivalent.
And we have the same rules by
the way of retrospectivity,
which is five years for the rulings,
which are into force in 2014.
So the category you refer to,
I'm not aware of any difficulty
that the U.S would have
in making sure that this
information will end up
in the right hands,
meaning the hands of the
competent authorities
of the countries which could
be impacted by such callings.
- Okay. Yep.
Other questions?
Yes Ethie.
- Microphone
- You better,
- Microphone.
- you better go over.
Yeah.
(Pascal coughs)
- Sir Pascal, thank you very
much for that fascinating talk,
and you know congratulations
for achieving something
that made in this room wold
have said was impossible,
three years ago.
One of the key messages of your talk,
is that politicization
of international tax
made things possible that
were never possible before.
And then the question that
that raises to my mind,
which I wonder what you think about is,
are there things that politicisation
makes more challenging?
I don't know you prepared to say kind of,
what you think those are?
So that's the question
- And that's a good question.
Meaning that I don't have the answer.
(laughs)
Politicization, yes, for sure.
And again, I think tax policy
belongs to politicians,
and must do so.
Now there are always
risks going with that.
And the risk is, I mean,
just getting populists,
trained to get easy
fixes for complex issues.
We should never hide,
especially as civil servants,
as technocrats, we should
never hide behind complexity.
So you don't understand it's too complex.
At the end of the day
you have a real test.
Does it make sense or not?
Does it pass the test or not?
And I think it's true everywhere.
So when you don't understand something or
when you're not able
to explain something to a decision maker,
there is something wrong.
Either the decision maker is really dumb
but you cannot assume that
or you have a problem.
And you know, if you apply
that to the financial industry,
I think we would have saved
a lot of money and crises.
If we had that test.
So, politicization clearly has helped
in terms of getting the top down approach.
You know, when you have civil servants,
the multilateral instrument
is a good example.
When I was a treaty negotiator,
and the share of working
party one of the UCD
which is the working party
where treated negotiators discuss,
we said, "Well, if we all
agree on the provision
to update the model tax convention,
then we should have a
mechanism to implement that.
I mean, quickly through a process.
But I mean, you're just ahead of,
you need in a large,
I mean body and you need to your minister,
I mean, to go through many steps
and you never convinced
the ministers of that
when you have all the G20
finance ministers meeting
and you tell them, because there are,
I mean, common sense guys, you know,
if you all agree on the substance,
why don't you translate
that into a tax treaty,
a multilateral treaty,
which will amend the bilateral
treaties and they say,
"Yeah, why not?"
So you can do that,
now, what are the down,
I mean the, the downsides of these
or does this make things more complicated?
At some point, you may have,
where you have the real fights.
Some blockage but so
far we haven't dealt with the issues
with the real fights.
Because the real fights are
with a small jurisdictions
which are not in the G20.
And which are the bat legitimate to say.
I mean, you know, the small
jurisdictions in other word,
in another word, they have
benefited almost unduly
from globalization and
I don't put the blame on them.
And now I have plenty of friends
in all these jurisdictions
since I created the Global Forum.
So they have benefited, but
that wasn't the right thing?
Probably not.
So now it's back back to normal.
So, the politicization at the G20 level
so far has not created
any major difficulties
but has been a problem solver.
I remember a meeting,
even a more exclusive
meeting than the G20 meeting.
It's a G7 meeting.
It's much more exclusive because the G20
you have a big hole with,
I mean it's very official.
The G20, it's in the dining
room of a hotel in Hasdon,.
And around the table, you have 10 people,
just the 10 finance ministers.
And I remember a discussion,
quite lively discussion between Chuck Lou
and George Osborne.
It was on BEPS and I let you guess
what they were talking about there.
And that has been more of a facilitation
in terms of identifying
the issues and then going,
and then, I mean, going to
solution or at least come
understanding or better
understanding of the issues.
So far, no, I don't see major difficulties
arising from that.
We'd see on the way forward
for the implementation,
what I can tell you is that both in
Lima and before in Beijing,
I met him a couple of times.
Luigi way, the finance minister of China
who's going to take
over the G20 presidency,
on the 1st of December.
He said and be happy
or scared your choice.
But he said among the key priorities
of the G20 Chinese presidency,
among the top priorities,
the top four priorities
is BEPS implementation, so BEPS is not
gonna go away from the a G20 agenda,
but that would be for the
Implementation of the inclusive framework
and to make sure that the,
this translates into fact
- Thanks a lot Pascal for
this wonderful lecture
on the amazing project
and I have two questions
on the political aspect and
the professional aspect of the,
political aspect it is clear that the role
of the BEPS project.
AT the political aspect
it is clear that the role
of the OECD is rising
and the OECD is playing
an amazing project and amazing role.
But is there really a more
international cooperation
in the international tax
system today and in the future?
I am not sure there is really more
cooperation in the easy issue of
automatic exchange of information.
But when we come to
the difficult issues of
international co-offered a tax,
international tax competition,
on eCommerce taxation
and all the other issues,
there is no real agreement
between the countries
and three Al cooperation.
And I will give you the last day example.
The EU itself about six months ago
initiated its own mini semi BEPS project,
I don't know what they, what to call it.
And they tried to describe
it in a in different ways
and the how to,
what are the relations
between the EU project
and the OCD project.
So given the EU project
and the other issues,
I am wondering is really a,
we really face more
international cooperation
in the 21st century.
I am not sure about about that.
And as to the professional lay aspect,
a automatic exchange of
information is really important
and it gives the international
tax authorities more tools.
But the lack of information,
it wasn't the real,
the real problem of the
international tax system.
Tax authorities in new
what Google is doing,
they knew what Starbucks is doing,
but they didn't have the tools to face
these problems.
So, do we really give
them the tools today.
And what do you think
about role of the public?
Let's see what about the idea of making
the disclosure rules,
not disclosure to the tax authorities.
But disclosure to the
public so that the public,
the market, the newspaper,
the media, the NGOs,
might be more successful in tackling these
say tax planning schemes more than
the tax authorities with all the
between the countries. Thanks.
- Well, thanks for these,
on the first one.
I would respectfully disagree.
I think we do have more cooperation.
I mean exchange of information
is not an nego tool,
and beyond that you create communities.
I mean you create the community
of the competent authorities.
They talk to each other,
they build programs together.
They pick up the phone
and talk to the other
because they know the other.
It reminds me of a time where
I was the French competent authority.
You just didn't know the people
because you never met them.
And to solve mutual agreement procedure,
it was just a nightmare you sent.
I remember sending letters to
inform the other competent
authority that we had a case.
And then three months later
I received the response,
well he's no more of
the competent authority.
Please resend the letters,
resend the letter.
(laughs)
And it was endless.
We are building a community.
I think it's not totally by accident
that the U.S and India
which seem to have some issues on
mutual agreement procedures
that they've been able to
come to term that quickly.
I mean Bob stack and Akiles Ranjan,
and they're both fantastic.
They meet every six weeks in Paris.
I mean it's about cooperation.
It's about talking to each other.
It's about building something together.
It's about reporting the same things
to your ministers and briefing them,
and building these.
And that goes beyond the
exchange of information.
The second thing is, I've read in a number
of law firms survey that
a number of countries
are taken more than 50
you need actual measures
before the completion of the BEPS project.
And then, I mean I was alerted
when looking at the details,
most of these measures or CFC hybrids,
and so it's true that they were taken
but it's been the case
for the past 50 years
that countries take unilateral measures.
The difference here is
that the don't do it
without talking to the others.
I'm not saying that the world is perfect.
I'm not saying that they
are all BEPS compliant,
but we do have something
like more convergence,
like more cooperation.
I strongly believe in that.
And that would take the EU
example precisely to illustrate
that, the EU package that the tabled
is fully BEPS compliant
except for the CCTV
or something like that.
You know, the consolidated
common base for corporate
income tax, except for that
they are fully compliant.
Exchange of tax rulings
is a good illustration.
They ended up exactly in
the same place as we did
on the common reporting standard.
We've been able to establish
a CRS with a mechanism,
an IT mechanism to exchange information,
which is you and FATCA compatible.
So I'm pretty confident
there as regards the tools.
Would public pressure be more efficient?
What I am paid for is to
make sure that the tax administrations
get the information,
and that can tell you
that around the table,
the 60 plus countries which were there,
none of them said, "We should go public."
They all said,
"We need the information for ourselves
and we know that we have to rely
on the headquarter or company
country to get across,
check on the information, we'll get."
So, jeopardizing the whole
mechanism to get it public.
And they see why,
I mean the Academy IX, the NGO was,
and some of those would like
the information to be public,
and I have respect for that.
But jeopardizing tax administrations,
getting the information for,
I mean just the public,
that was not the goal.
And I'm confident that we'll get
something which will be
up and running very soon.
It starts on 2016,
fiscal year accounts
and the information exchange
will start in 17/18.
So that's for tomorrow.
- Last question. You have it.
- Thank you.
Pascal, as you may be
aware Stack Foundation,
which is a conservative
think tank in this country
is honoring Bob Stack next month,
for protecting U.S interests in these
negotiations with BEPS.
I wonder if from your perspective
to what extent was the U.S
stance on various action plans
and impediment to progress,
to what extent did it help,
and how do you think it'll play out
in the implementation phase,
knowing as you do Mr. Jacob,
Lou's position, Mr. Stack's position,
who will continue to
represent the U.S interest?
Thank you.
- Thank you.
I think Bob did his job,
which is to protect us interests.
Akidash Runjan did his job,
which was to protect Indian interests.
Iduach Macros did his job,
which was to protect the French interests.
All the countries around the
table protected their interest.
What was a bit tricky was that
they had to reach agreement
by consensus.
And you know, the rule of consensus,
you reached consensus when
nobody puts the flag up to stop.
It's not unanimity in the EU,
it's in the European Union.
It's unanimity, meaning that
everybody has to say yes.
And when you're called on
to say they're yes or no,
very easily, you will say no.
Consensus, it's more difficult to say,
"Well, I'm gonna block these."
Especially as this is soft legislation.
So they had to agree by consensus,
which means that Bob did a great job,
but I think Achalasia Ron John to take,
I mean two countries at the end of,
I mean extreme ends of the
spectrum there in terms
of interest on transfer
pricing for instance,
they both did a great job
because they agreed so they
did protect their national
interests but they were also,
they had also to compromise
and the deeds compromise.
So then you can tell the story you want
of a one side.
story to say actually
there is no change at all,
and we are all comfortable,
so be it and we were happy with that.
But the truth is that
this is a real compromise.
Why? Because it's a
meaningful set of agreements
which has been reached,
and all that is reflected
in the explanatory statement
that they should have mentioned,
which is on the top of all the reports
to make sure that people knew
what they were agreeing upon.
Minimum standards, convergent measures.
These are not legal terms.
These are political terms
which reflect the commitment.
So again, Bob did a tremendous job.
He was real pain in the neck at
some point in the negotiation,
was where a number of other delegates,
but at the end of the day,
we got agreement on something
that all the countries
think is a good set of instruments
to fight base erosion and profit shifting.
And I'm not sure that there is any
frustrated countries there.
There are all happy.
And that's why we ended up on
Friday morning in Lima
with so many ministers,
even the finance minister of
Peru who's not a member of the G5 said,
"I want to be there as the host country
because I've participated to the work,
and I want to be there."
So, everybody's is
equally unhappy or happy.
And that's the beauty of good compromises.
- Any way you look at it,
we have reached a major inflection
point in the field of
international taxation,
and we are extremely
fortunate to have Pascal here
to give us fresh news
and to report on this
fantastic achievement,
which is not only an
achievement of the OECD,
but I think an achievement
for you personally, Pascal.
- So thank you very much.
- Thank you.
- Thank you all.
(handclaps)
- Great.
- It was really great.
- Thank you for coming,
- Thank you for inviting me.
