Action urged to solve BRI tax issues

More cooperative action is urgently needed by countries associated with the Belt and Road Initiative to mitigate the tax related obstacles in cross-border trade and investment, according to BRI tax authorities.

The authorities are calling for a new approach in the next two years to resolve the lack of clarity and frequent changes of basic tax rules that confuse cross-border taxpayers and to jointly resolve tax disputes, especially as technology-driven and digital business models are emerging.

Other key issues of concern for the tax authorities include multinational companies seeking ways to shift profits to low tax-rate areas or to avoid paying taxes; transfer pricing activities - companies and subsidiaries shifting goods and services among each other to create tax benefits - which increasingly trigger tax disputes; and double taxation, which adds to the costs of cross-border trade and investment.

During a three-day conference in Wuzhen, Zhejiang province, an action plan was formed and a new vehicle was established for coordinating work under a unified system in countries involved in the initiative to limit the negative effects of complex tax related issues.

"Instead of just talking about the tax issues, we should actually do something to implement the approach," said Wang Jun, commissioner of the State Taxation Administration.

During the conference, Wang was elected council chairman of the new multilateral Belt and Road Initiative Tax Administration Mechanism, or Britacom.

A two-year plan was agreed to at the conference that would increase predictability and consistency in the application of tax laws, tax treaties and administrative practices.

Britacom will conduct a survey "to better understand cross-border tax disputes in BRI jurisdictions by collecting further information on the types and causes of disputes", the plan said.

An evaluation of the plan's implementation will be made before 2021. The next Britacom conference is scheduled to be hosted by Kazakhstan in 2020.