Source: General Office of the State taxation Administration
The Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM)
A tax collection and management cooperation mechanism for countries along the Belt and Road was established at a forum held in Wuzhen, Zhejiang province, on April 18-20. The Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM), was launched by the Chinese tax authorities to further strengthen tax cooperation and build a growth-friendly taxation environment.
More specifically, the BRITACOM is intended to facilitate cross-border trade and investment along BRI routes by helping resolve tax disputes, increasing transparency, streamlining compliance, digitizing filing and building a growth-friendly tax environment which fully respects the sovereignty, territorial integrity, and tax laws of each participating jurisdiction.
In 2014, the Chinese taxation authorities increased their engagement in international tax cooperation, and improved the efforts in tax services for Belt and Road construction to better ensure smooth economic and trade flow among Belt and Road countries.
In 2015, the International Taxation Department of the State Taxation Administration (STA) set up an overseas taxation office that works on taxation services and management for "going out" Chinese taxpayers. It has come up with 10 measures targeting Belt and Road tax service for boosting cooperation and mutual benefits.
In 2017, Wang Jun, commissioner of the STA, put forward three initiatives to strengthen Belt and Road tax cooperation during the Belt and Road International Cooperation Summit in Beijing. He proposed the Belt and Road countries should improve their tax systems and eliminate tax barriers; strengthen bilateral cooperation and effectively reduce tax burdens; and deepen multilateral cooperation to improve tax governance capabilities, so that the tax authorities of the Belt and Road countries can work together to push forward Belt and Road construction.
In 2018, the Chinese taxation authorities further strengthened policy communication and management cooperation with other countries.
The STA took part in the First Global Conference of the Platform for Collaboration on Tax. In addition, it worked with the Kazakhstan Taxation Authority to host the Belt and Road Tax Cooperation Conference in Astana (now renamed Nur Sultan), the capital of Kazakhstan. This was the first international conference on the theme of Belt and Road tax cooperation, which laid a solid foundation for the follow-up tax cooperation.
In the same year, the 48th Annual Meeting of the Study Group on Asian Tax Administration and Research (SGATAR) was held in Hangzhou, China, at which the "Tax promotes 'Belt and Road'", one of the three main topics, drew great attention and support from the participants.
The STA has also helped other developing and low-income countries to improve their tax collection and management capabilities through legislative consulting and technical assistance. It established the OECD China Multilateral Tax Center in Yangzhou, China, the first OECD multilateral tax center in a non-OECD country. From 2015 to 2018, the STA held 22 training courses for more than 400 tax officials from over 50 Belt and Road countries and regions, helping developing countries improve tax collection and management capacities.
"Since the Belt and Road Initiative was proposed in 2013, the Chinese tax authorities have been deeply involved in global tax administration. In the past six years, the STA has strived to establish a new and open tax cooperation pattern based on the need of Belt and Road construction," said Liao Tizhong, director of the International Taxation Department of the STA.
In 2018, China signed tax treaties or protocols with seven countries. China has so far signed tax treaties with 111 countries and regions around the world, covering basically the main destinations of China's foreign investment.
In September 2018, the STA held a multilateral consultation on the Belt and Road tax collection and management cooperation mechanism, with heads of the tax authorities of 22 countries (regions) and 37 representatives of the OECD and the IBFD in attendance. It was a unique gathering of expertise offering high-quality information and education on international taxation consulting and the text of the cooperation mechanism. Attendees formed the initial text of the framework agreement and the implementation path plan of the cooperation mechanism.
Meanwhile, it was determined to hold the first Belt and Road tax collection and management cooperation forum in April 2019, and the timetable and task map for establishing the cooperation mechanism were established.
Through the joint efforts of all parties in this Belt and Road tax collection and management cooperation forum, the tax collection and management cooperation will further strengthen mutual assistance and cooperation in the multilateral taxation field, lift tax collection and management capabilities, and improve the international taxation governance system, creating a good tax environment for Belt and Road construction.
Currently, tax authorities from 34 countries and regions including those from Kazakhstan, Uruguay, United Arab Emirates (UAE) and Nigeria signed a memorandum of understanding and become council members of BRITACOM. 22 tax administrations or finance departments, including those from the G7 countries, as well as international organizations signed up to be the Observers. In addition, 11 world-recognized tax experts signed up to be the Members of the Advisory Board. The diversity of jurisdictions and expertise enriched the discussions of the BRITACOM.
The BRITACOM members have to resolve in the next two years 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 members 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.
BRITACOM, according to its statement, supports and reinforces prevailing international tax standards, including the existing OECD, United Nations and International Monetary Fund models to solve international tax issues.