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Serbian Position on OECD/G20 Base Erosion and Profit Shifting (BEPS) Project

Learn about Serbia's involvement in the OECD/G20 BEPS Project, its tax treaties interpretation, protecting tax base Serbian experience, and its stance on BEPS provisions.

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Serbian Position on OECD/G20 Base Erosion and Profit Shifting (BEPS) Project

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  1. OECD/G20 Base Erosion and Profit Shifting Project (BEPS)Serbian Position Dejan Dabetic, LL.M. Head of Tax Treaties Division Department for Fiscal System Ministry of Finance Republic of Serbia

  2. SERBIA AND OECD • Serbia is not an OECD member country. • However, Serbia actively participates in some of the main OECD events (with respect to tax treaties - e.g. Global Forum on Taxation, workshops etc). • There is a Serbian position in the Commentary of the OECD MTC (2014).

  3. SERBIAN TAX TREATIESINTERPRETATION • As regards the interpretation of Tax Treaties (56 treaties - strating from 1 january, 2017) the approach applied in the practice of the Republic of Serbia so far testifies the very high level of adherence to the Commentary of the OECD Model Tax Convention(also, to the UN Model ... regarding some of the issues).

  4. PROTECTING TAX BASE SERBIAN EXPERIENCE (1/4) • The Serbian GAARs (cover both purely domestic and cross-border situations); • The Law on Tax Procedure and Tax Administration (LTPTA) lays out the principle of „substance over formˮin tax matters, which gives broad discretionary powers to the Serbian Tax Administration (STA); • The scope of its true impact is yet to be determined, as neither the STA nor the Serbian judiciary has a developed practice in its application (in Serbia, we do not have special tax court).

  5. PROTECTING TAX BASE SERBIAN EXPERIENCE (2/4) • The Serbian SAARs • SCITL – two groups of provisions could fall under the SAAR concept: • the transfer pricing rules (adhere to the OECD „arm’s length” standard) • the thin capitalization rules; • No CFC rules in Serbia !!! • Serbian law provides for interaction between the GAARs and SAARs(boundaries are yet to be determined in practice).

  6. PROTECTING TAX BASE SERBIAN EXPERIENCE (3/4) • Minister of Finance published a list of 51 jurisdictions with preferential tax regimes (black list) to which specific rules apply (some consider concluding TT with Serbia); • At present, Serbia has not concluded a convention in line with the OECD Model Agreement on the Exchange of Information on Tax Matters, and is not a signatory to the Convention on Mutual Administrative Assistance in Tax Matters (expected to change ...???).

  7. PROTECTING TAX BASE SERBIAN EXPERIENCE (4/4) • Relation between domestic law anti-avoidance rules and TTs – we consider paragraph 9.2 of the Commentary on Article 1 of the OECD MTC to be applicable in Serbian circumstances - therefore, • Serbian GAARs can be used in both purely domestic and treaty situations (e.g. Art. I of the Protocol to the 2009 Serbia-Spain TT and provisions in other treaties ...).

  8. SERBIA AND BEPS • Republic of Serbia is monitoring OECD/G20 Base Erosionand ProfitShifting(BEPS); • Republic of Serbia is a member of the „Ad hoc Working Group for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shiftingˮ- MLI (Action 15 of BEPS) and intends to sign it(Signing ceremony is planned for the week starting on June 5, 2017);

  9. SERBIA AND BEPS(cont’d) • Serbian TTs generally accept all proposals dealing with combat against fiscal evasion, treaty shopping, improper use of the treaty etc. and accept the following provisions (main purpose tests, LOB clauses, remittance clauses CONTAINED IN BEPS PACKAGE etc. – however, some of them have to be studied more in the future); • With respect to the Tax Treaties to be covered by the MLI, Serbia wants to see all of its signed treaties as „Covered Tax Agreementsˮ (although, some of them are not in force, yet); • According to the MLI, Serbia is preparing its list of reservations and notifications.

  10. SERBIA AND BEPS(cont’d) • Republic of Serbia is not member of the BEPS Inclusive Framework – so far ... ??? • Expected to change ... ???

  11. TO CONCLUDE REALISATION OF THE OECD/G20 BEPS Project will be a long lasting (or not ...???) process !!! HOWEVER, IT CAN’TBE AVOIDED !!! Having said that: I would mention, that there are two persons only, who know whether to pay taxes or not !!! One is God and the other is Pascal Saint-Amans (Director of the OECD CTPA) 

  12. Contacts Thank you for your attention QUESTIONS? www.mfin.gov.rs dejan.dabetic@mfin.gov.rs 13/13

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