Bloomberg BNA and Tax Analysts Interview Elan Keller on OECD Forum Tax Chiefs' Pledge for Greater Cross-Border Cooperation

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Oct 27, 2014, 04:02 ET

NEW YORK, Oct. 27, 2014 /PRNewswire/ -- Bloomberg BNA's International Tax Monitor and Tax Analysts interviewed Caplin & Drysdale's Elan P. Keller concerning a pledge made at the 2014 OECD Forum on Tax Administration (FTA) by tax chiefs from 38 countries to invest in resources to implement a new standard on automatic information exchange, and a promise to improve the mutual agreement procedure (MAP) in a bid to boost tax cooperation. The new platform – Joint International Tax Shelter Information and Collaboration, or JITSIC – will be a global effort against offshore tax avoidance by large companies and wealthy individuals, and base erosion and profit shifting by multinationals. According to Mr. Keller, "...the FTA's latest work should cause taxpayers and their tax advisers to play closer attention to their tax planning's global consequences."

The expanded JITSIC is open to all FTA members on a voluntary basis. Keller said changing JITSIC from a "centre," which implies a small inner circle, to a "collaboration," connotes a broader effort to achieve more participation from substantially more revenue authorities.

The old JITSIC has been an effective tool in dissecting transactions and providing robust results to revenue authorities following its procedures and expanded audits across multijurisdictions, he said.

"The fact that the number of countries involved in JITSIC will expand should cause both taxpayers and their tax advisers to take more notice of the overall global consequences of their tax planning, and the way transactions are going to be scrutinized from both an economic and culture perspective," said Keller.

Countries' competing cultural, political, and economic interests, will combine to make the new JITSIC audits much more intense and complex, so revenue authorities need to sort out proper procedures for information sharing to protect taxpayer privacy and to avoid long and drawn out audits that are inefficient and create significant uncertainty and a resource drain on taxpayers, said Keller.

In his interview with Tax Analysts, Mr. Keller stated:

"...[T]he original JITSIC was narrowly focused on a few countries but remains extremely effective. The FTA's commitment to building on the existing JITSIC within the FTA framework is a significant endeavor."

"It will have an impact on taxpayer behavior and on tax adviser behavior," Keller said, noting that both taxpayers and tax advisers will have their transactions scrutinized more broadly by tax administrations. "If this broadened JITSIC is as effective as the original JITSIC, then it will make a big difference," he added.

It's unclear whether the JITSIC Network's rules of engagement will be the same as those of the original JITSIC, Keller said. The more countries involved, the longer the audit process takes, adding to taxpayer uncertainty, he said.

Under the JITSIC Network, tax advisers will be held more accountable for the transactions they plan, in both developed and developing countries, according to Keller. "It's not enough to get it right in the U.S., U.K., Australia, Canada, or Japan," he said. "Now you have to think about some of the other countries that are involved in this."

For the full articles, please visit the websites for Tax Analysts and International Tax Monitor (subscription required).

About Elan P. Keller

Elan P. Keller is a Member in Caplin & Drysdale's Corporate, Business & Transactional Tax, International Tax, Tax Controversies practice groups in the firm's New York office. Clients seek his advice on matters involving tax due diligence and structuring cross-border and domestic M&A transactions; the U.S. aspects of inbound and outbound operations; transfer pricing; corporate restructurings, reorganizations and distributions; capital markets and structured finance transactions; infrastructure and leasing transactions; and oil, gas, energy, and natural resource transactions. Mr. Keller can be reached at 212.379.6030 or [email protected].

About Caplin & Drysdale

For half a century, Caplin & Drysdale has been a leading provider of a full range of tax, tax controversy, and related legal services to companies, organizations, and individuals throughout the United States and around the world. With offices in New York City and Washington, D.C., the firm also provides counseling on matters relating to bankruptcy, creditors' rights, political activity, exempt organizations, complex litigation, employee benefits, private client services, corporate law, and white collar defense. For more information, please visit us at www.caplindrysdale.com.

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