In recognition of the uncertainty multinational groups face, the OECD has launched a pilot initiative, the International Compliance Assurance Programme (“ICAP”). The pilot was launched at the end of January with 8 countries (including the UK) signed up to offer this new way of working.

The programme will create a platform for dialogue between taxpayer and tax authorities to discuss information presented in the country by country (“CbC”) report. The tax authorities will jointly review the information supplied by a multinational group and will co-ordinate any follow-up questions. The taxpayer can engage with tax administrations simultaneously rather than deal with separate enquiries. The early dialogue will help tax authorities determine the level of risk on issues like transfer pricing and permanent establishments as well as other material issues. The coordinated dialogue and the ability to provide a narrative to aid understanding of the CbC data will overcome one the perceived limitations of the CbC report (namely that it's just a data dump).

As multinational groups grapple with complex laws, many of which initiated under the OECD BEPS programme, this development will be welcome. Discussing risks with several tax authorities simultaneously will offer a major boost in efficiency but it's unlikely to offer the legal certainty that multinationals crave. The tax authorities signed up have said that while they are unlikely to open enquiries into the tax risks they get comfortable on during the ICAP process, there’s no guarantee.

ICAP won’t be a substitute for an APA but it could take some taxpayers one step closer to securing one in the future. For low risk taxpayers this style of multilateral discussion with tax authorities offers a glimmer of hope, but for others, tax certainty will remain a mirage.