On December 16, 2024, the Organisation for Economic Cooperation and Development (OECD) and Group of 20 (G20) released its Peer Review Reports on the Exchange of Information on Tax Rulings as part of their joint Base Erosion and Profit Shifting (BEPS) project. Under BEPS Action 5, tax authorities are required to share relevant tax "rulings that have been granted to a foreign related party of their resident taxpayer or a permanent establishment." The Report demonstrates a high degree of compliance among countries, which furthers the OECD and G20's goal of increasing transparency. Specifically, 104 jurisdictions — including the U.S. — met the minimum standards and did not receive any recommendations for improvement. Thirty-two jurisdictions received at least one recommendation.

This "transparency framework" requires the exchange of information relating to five categories of tax rulings: "(i) rulings related to certain preferential regimes, (ii) unilateral advance pricing arrangements (APAs) or other cross-border unilateral rulings in respect of transfer pricing, (iii) rulings providing for a downward adjustment of taxable profits, (iv) permanent establishment (PE) rulings; and (v) related party conduit rulings." The report states that the U.S. issues only three of these rulings (APAs, PE rulings, and related party conduit rulings), and in 2023 exchanged thirty-one unilateral APAs and zero PE or related party conduit rulings. The U.S. shared all tax rulings with the relevant foreign tax authorities within three months of the information becoming available (i.e., when the APAs were finalized). 

Given the high degree of compliance under this information sharing framework, taxpayers should be aware that specific tax rulings — namely, unilateral APAs with the U.S. — are subject to spontaneous information exchange requirements with the other affected country(ies). 

For more information, please contact:

Brian S. Gleicher, bgleicher@milchev.com, 202-626-1589

Katherine Lewis, klewis@milchev.com, 202-626-5894

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

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