How David Bradbury is shaping the global tax agenda

It’s been four years since David Bradbury joined the Organisation for Economic Co-operation and Development (OECD).

Before he started in 2014, there was no Brexit, no European Commission ruling on Apple state aid, and no President Trump.

Clearly, the world has changed.

As Head of the Tax Policy and Statistics Division at the Centre for Tax Policy and Administration, David is among key global leaders focused on base erosion and profit shifting (BEPS).

Speaking ahead of his keynote at the 2018 World Congress of Accountants in Sydney, Australia, 5-8 November, David said digital technologies are having a significant impact on the issue.

“The rules that govern international taxation, or cross-border taxation, have essentially been in place for about 100 years,” he said.

Leader in global public tax policy, David Bradbury
Head of Tax Policy and Statistics Division Centre for Tax Policy and Administration (OECD) – Organisation for Economic Co-operation and Development

The challenge of digitalisation

Much of David’s work at the OECD is focused on the base erosion and profit shifting (BEPS) project. Ironically, this means understanding international taxation as it relates to physical goods and services, which play a reduced role in contemporary international trade.

New legislation will have to address the increasing role of intangible assets in value creation.

“For some people, this is about the big tech giants but, to be honest, the issue is actually broader than that because digitalisation is not just about a handful of companies, it’s a process that is changing the way most companies operate,” said David.

“Things are moving so fast, particularly in that space, that it’s a challenge for policymakers everywhere, but especially in tax.’’

Multinational businesses will need to deal with expanded reporting, new compliance standards, mandatory questioning, international and domestic rule changes and treaty amendments, as well as comprehensive risk assessment and management.

Global consensus

In 2013 the OECD began building a community of countries concerned about base erosion and profit shifting (BEPS), a strategy multinational organisations use to evade taxes.

A consensus was achieved among the 44 OECD and G20 countries, and in 2015 the OECD published the BEPS project outlining strategies for implementing standards and identifying risks in a 15-point action plan. This action plan was then extended to include a broader group of non-G20 countries.

When the BEPS project was initiated there was a whole range of stakeholders resisting reform. According to David, in some cases they were countries, but in many cases, they were companies and taxpayers.

“When you have something that’s been driven through the G20, that includes the 20 largest economies in the world together and they agree they’re going to tackle something, it really makes it very hard for the countries that want to resist and sustain their positions,” said David.

“We now have 114 members, operating a forum on the basis of consensus. Prior to the BEPS project, no such forum existed. Having so many countries at the table is a really significant thing, to begin with,” he said.

Recently, Australia was one of 76 jurisdictions to sign the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Given a large number of countries and jurisdictions involved, gaining global consensus is a particular challenge.

“Keeping countries at the table is crucial, we have to constantly rework our approach in order to try and come up with something with technical integrity that is also capable of addressing the range of views that countries have,” said David.

“It’s not just tax, it’s international diplomacy.”

Public demand for action

International tax avoidance has captured the public imagination, spurred on by decisions like the European Commission ruling on Apple in Ireland and Australia’s own proposed ‘digital tax’. This is putting increasing pressure on governments to implement the action plan and adopt the changes to global taxation laws.

“I think the public consciousness is increasing and demand for action clearly is there,” said David.

“People are very aware that some of the biggest and most profitable companies in the world have been working very hard to minimise the amount of taxes they pay and, in some cases, these very high-profile companies appear to be paying very little tax at all.”

“There has also been growing groundswell of support for governments taking action to make sure that, just as the individual that goes off to work each day has to pay their income tax, that these companies also be required to pay tax. There’s a principle of fairness that is being undermined,” he said.

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