Harmful Tax Practices – 2017 Peer Review Reports on the Exchange of Information on Tax Rulings

Iceland

Iceland has met all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) and no recommendations are made. In the prior year peer review report, Iceland received one recommendation for not providing information in the form of the template contained in Annex C of the Action 5 Report (OECD, 2015) or the OECD XML Schema and in accordance with the OECD XML Schema User Guide (OECD, 2017b). Iceland has addressed the issue and the recommendation is removed.

Iceland can legally issue two types of rulings within the scope of the transparency framework.

In practice, Iceland has issued one past ruling; and for the period 1 April 2016 - 31 December 2016 and the year in review, Iceland issued no future rulings within the scope of the transparency framework.

No peer input was received in respect of the exchanges of information on rulings received from Iceland.

Introduction

541.  This peer review covers Iceland’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.

A. The information gathering process

542.  Iceland can legally issue the two following types of rulings within the scope of the transparency framework: (i) permanent establishment rulings; and (ii) related party conduit rulings. The Directorate of Internal Revenue (Icelandic tax administration, “IRD”) has authorised around 50 persons to issue those rulings. Rulings are published on the tax administration website in anonymised form.1

Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)

543.  For Iceland, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2014 but before 1 April 2016; or (ii) on or after 1 January 2010 but before 1 January 2014, provided they were still in effect as at 1 January 2014.

544.  In the prior year peer review report, it was determined that the IRD’s undertakings to identify past rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. The IRD’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)

545.  For Iceland, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.

546.  In the prior year peer review report, it was determined that the IRD’s implementation of a new system to identify future rulings and all potential exchange jurisdictions was sufficient to meet the minimum standard. The IRD’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.

Review and supervision mechanism (ToR I.4.3)

547.  In the prior year peer review report, it was determined that the IRD’s review and supervision mechanism including a dual control principle was sufficient to meet the minimum standard. On 11 May 2017 the IRD announced a new person as a Competent Authority responsible for all exchanges of information, including rulings. Therefore as of that date the person issuing the ruling is no longer the Competent Authority. The person issuing rulings is subject to the supervision of the Director General of the IRD. The Competent Authority is directly responsible to the Director of the Administrative Department, an organizational unit within the IRD, concerned with daily management of the Director General‘s office, organizational issues, as well as international relations and cooperation, and subject to his supervision. The supervision of the Director General and the Director of the Administrative Department includes reviewing whether rulings are correctly identified and exchanged.

548.  As Iceland enhanced its review and supervision mechanism it continues to meet the minimum standard.

Conclusion on section A

549.  Iceland has met all of the ToR for the information gathering process and no recommendations are made.

B. The exchange of information

Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)

550.  Iceland has the necessary domestic legal basis to exchange information spontaneously. Iceland notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

551.  Iceland is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”), (ii) the Nordic Convention with Denmark, Faroe Islands, Finland, Greenland, Norway and Sweden and (iii) double tax agreements with 39 jurisdictions.2

Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)

552.  In the prior year peer review report, Iceland was recommended to exchange information on future rulings using the form set out in Annex C of the 2015 Action 5 Report (OECD, 2015). Iceland did not issue any new future rulings in the year of review, but will use the Annex C template for any exchanges of information on future rulings and will complete the summary section in the Annex C as prescribed in the internal FHTP suggested guidance. Therefore it is determined that the IRD’s completion and exchange of templates are sufficient to meet the minimum standard and the recommendation is removed.

553.  As no rulings within the scope of the transparency framework have been issued in the year of review, Iceland was not required to complete any exchanges of information and there is no data to report on the timeliness of exchanges

Conclusion on section B

554.  Iceland has the necessary legal basis for spontaneous exchange of information and an administrative process in place for exchanging information. Iceland has confirmed that it will use the template in Annex C of the 2015 Action 5 Report (OECD, 2015) for the exchange of information on future rulings and the recommendation made in the prior year peer review is removed. Iceland meets all of the ToR for the exchange of information process and no recommendations are made.

C. Statistics (ToR IV)

555.  As no exchanges were required to occur in the year of review, no statistics can be reported.

D. Matters related to intellectual property regimes (ToR I.4.1.3)

556.  Iceland does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

OECD (2017a), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.

OECD (2017b), Country-by-Country Reporting XML Schema: User Guide for Tax Administrations, OECD, Paris. http://www.oecd.org/tax/country-by-country-reporting-xmlschema-user-guide-for-tax-administrations.pdf.

OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.

OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1.  Available at: www.rsk.is/fagadilar/bindandi-alit (accessed 20 November 2018).

← 2.  Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Iceland also has bilateral agreements in force with Albania, Austria, Barbados, Belgium, Canada, China (People’s Republic of), Croatia, Cyprus, Czech Republic, Estonia, France, Georgia, Greece, Greenland, Germany, Hungary, India, Ireland, Italy, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Netherlands, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, Spain, Switzerland, Ukraine, United Kingdom, United States, Viet Nam.

Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.

Note by all the European Union Member States of the OECD and the European Union. The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.