For the purposes of this peer review, these terms have the following meanings:
1. the term “best efforts approach” means the efforts undertaken by tax administrations to obtain information on the potential exchange jurisdictions in relation to past rulings, where such information was not included in the ruling itself. The “best efforts approach” does not require the tax administration to contact the taxpayer to obtain this information;
2. the term “Competent Authority” means for each respective jurisdiction, the persons and authorities which are responsible for exchanging the information on rulings;
3. the term “confidentiality” means a legal right that both the jurisdiction exchanging information and its taxpayers have to expect that information exchanged pursuant to the transparency framework is protected and used only for authorised purposes and disclosed only to authorised persons. All treaties and exchange of information instruments should contain provisions regarding the obligation to keep information exchanged confidential;
4. the term “Convention” means the multilateral Convention on Mutual Administrative Assistance in Tax Matters developed by the OECD and Council of Europe;
5. the term “de minimis rule” applies for those jurisdictions which conducted fewer than five exchanges of information on rulings in a specific category, whereby they have to list in section D of the report (Statistics) only the number of exchanges in that category and not the jurisdictions with which the information on rulings was exchanged;
6. the term “future ruling” means, for jurisdictions which are reviewed in this annual report, a ruling which was issued on or after a date agreed by the Inclusive Framework and which is specified in the report for each jurisdiction; these dates are either 1 April 2016, 1 April 2017 or 1 September 2017 depending on the date at which the jurisdiction joined the Inclusive Framework;1
7. the term “grandfathered IP regime” means an IP regime which was not consistent with the nexus approach and is treated as abolished, but where certain existing taxpayers in the regime can continue to receive benefits under that regime for a certain period of time
8. the term “international agreement” means exchange of information agreements which permit spontaneous exchange of information. This includes, but is not limited to, the Convention (in the circumstances enumerated in Article 7 thereof); double tax conventions based on Article 26 of the OECD Model Tax Convention on Income and on Capital or Article 26 of the United Nations Model Double Taxation Convention, and regional agreements such as the Council Directive 2011/16/EU on administrative cooperation in the field of taxation between European Union member states. A Tax Information Exchange Agreement (TIEA) that is based on the 2002 OECD Model will permit spontaneous exchange of information only if it includes Article 5B contained in the 2015 Protocol, or otherwise explicitly provides for spontaneous exchange of information;
9. the term “IP regime” means preferential regimes offering tax benefits in respect of income from intellectual property;
10. the term “new entrants” means for the purposes of grandfathered IP regimes, new taxpayers that more recently entered the regime for the first time as well as IP assets which were more recently brought into the regime but were owned by taxpayers already benefitting from the regime. For the purposes of the transparency requirements for jurisdictions reviewed in this annual report, new entrants were generally those taxpayers or assets that entered the regime between 6 February 2015 and 30 June 2016;
11. the term “nexus approach” means the requirements set out in Chapter 4 of the 2015 Action 5 Report in respect of IP regimes;
12. the term “number of exchanges” means the number of exchanges of information on rulings, counted as the number of jurisdictions that are sent the information on a ruling as opposed to the number of rulings which were the subject of the exchanges. For example, if information on one ruling is sent to three jurisdictions, then this counts as three exchanges;
13. the term “past ruling” means, for jurisdictions which are reviewed in this annual report, a ruling which was issued either on or after a date agreed by the Inclusive Framework and which is specified in the report for each jurisdiction. These dates are either 1 January 2010 or 1 January 2012 depending on the date at which the jurisdiction joined the Inclusive Framework and subject to certain of those rulings still being in effect as of a specific date;2
14. the term “peer input” means feedback provided by other FHTP members on their experience with a jurisdiction. Peers invited to provide input are those which have the legal framework in place for spontaneous exchange of information with the jurisdiction in question and which received information exchanges under the transparency framework from that jurisdiction. The peer input was collected by way of a questionnaire seeking feedback on issues such as the completeness, format and timeliness of exchanges. It is noted that for future rulings, the peer providing input should know the date of issuance of the ruling but would not know when the information on the ruling became available to the Competent Authority, and as such could not opine on whether exchanges on future rulings were late. However, if peers reported consistently long time lags between the issuance of future rulings and the exchanges of information, this would give cause to consider the issue more closely.
15. the term “potential exchange jurisdictions” means the jurisdictions with which information on rulings is to be exchanged as set out in Table 5.1 of the 2015 Action 5 Report, which are (i) jurisdictions of residence of related parties with which the taxpayer enters into a transaction covered by the ruling, or which gives rise to income from related parties benefitting from a preferential treatment; (ii) the jurisdiction of residence of the immediate parent of the taxpayer; (iii) the jurisdiction of residence of the ultimate parent of the taxpayer; (iv) for PE rulings, the jurisdiction of the head office or of the PE, as the case may be; (v) for related party conduit rulings, the jurisdiction of residence of the ultimate beneficial owner of the payment;
16. the term “preferential regime” means a regime that applies a preferential tax treatment to certain types of income or activities. Under the transparency framework, there is an obligation to spontaneously exchange information on cross-border taxpayer-specific rulings related to regimes that (i) are within the scope of the work of Forum on Harmful Tax Practices (as described in chapter 3 of the 2015 Action 5 Report); (ii) are preferential; and (iii) meet the low or no effective tax rate factor. Preferential regimes which meet these conditions are thus within the scope of the transparency framework irrespective of whether the regime is determined to have any harmful features;
17. the term “rebuttable presumption” means an optional feature of IP regimes, whereby taxpayers have the ability to prove that more income should be permitted to benefit from the IP regime in exceptional circumstances where taxpayers that have undertaken substantial qualifying research and development activity in developing a qualifying IP asset or product can establish that the application of the nexus fraction leads to an outcome where the level of income eligible for a preferential IP regime is not commensurate with the level of their research and development activity, as described in paragraphs 67 – 69 of the 2015 Action 5 Report;
18. the term “ruling” means any advice, information or undertaking provided by a tax authority to a specific taxpayer or group of taxpayers concerning their tax situation and on which they are entitled to rely;
19. the term “rulings within the scope of the transparency framework” means the five types of taxpayer-specific rulings described in paragraphs 95 – 119 of the 2015 Action 5 Report, which are (1) rulings related to preferential regimes; (2) cross-border unilateral advance pricing agreements (APAs) and any other cross-border unilateral tax ruling (such as an advance tax ruling (ATR)) covering transfer pricing or the application of transfer pricing principles; (3) cross-border rulings giving a unilateral downward adjustment to the taxpayer’s taxable profits in the country giving the ruling; (4) permanent establishment rulings; and (5) related party conduit rulings;
20. the term “third category of IP assets” means an optional feature of IP regimes, whereby income from certain IP assets may benefit from the IP regime if they share features of patents and are certified as such in a transparent certification process by a competent government agency that is independent from the tax administration, and provided that the taxpayer does not exceed certain revenue thresholds, as described in paragraph 37 of the 2015 Action 5 Report.