ORGANIS!:TIOIT FOT. :s1CO T01.

1IC -111

CO—O I..~,TIO1T E) L1;7,11;LOP: SATT L'c^_ri,`_; 26th Th uary, 1 77

.,.,...M....... 0

Scale
Cr. 'Ang.

C 0,1 a i 1. J;. F 13CLL Lii 11IUS

Summary record of the 12th 3ession

held at the Chttec u i:e la luette, i'aris
on Tuesday 1 Cth and 1: edno sday 19th January, 1977
CFA/A(77)1 — 2-

I. :ei;,aCTIC OF 0 .: Ic:.; _,. (1 T_:.; Œ: aT :: , 0: 176

The Comuittee re—elected the following officers of the
Committee 1. or 1977:
Chairmen: i,rs.t1:iallT .rooc (United _:inUaora)
7ice—Chairrlen: 'fr. Del Giudice (Italy)
::r. all? (Sweden)
;:r. Van :'or::u;:1 (Netherlands)
II. 2.DOTION OI' --. --, I th Ai:D API'i.OVAL OF
n•: .. r. p~~ r 3
11t:1 ~~L,sz!.11 1~C~i't.+1 ~! fÎ ~ ~l~ 1~+.~ iaiG
The Coi:mittee adopted. the :.:ende. of the 12th I`reating
L Fi./L (7G =7 and r ap-er oved the 3uimary :lec ord of the li th
.:eeting C,.+1-/i( r. 6}i7.
a

l'l..rl'_TI
III . DOT.UJIL i ....-...r.. ;:J."0_0;1.:12.12, liCTI ITI a
....+.+...+~.

The Chair :."z of ;. or'_:ing i arty 110.1 introduced the report

on the revision of the 1;61.; :,raft Double Ta:_ation Convention
EFL(76)7 Parts I to I117 and inforued the Co;.uittee that the
;teerin` Group of 1or l_ing Party 110,1 would meet early in
February î o:.' final editorial revisions. The SteerinG Group
would also tal;e account of conventions signed between 1st July,
1 )76 and 1 s t Dece:_ ber, 1,)76 (in par agra ah 3 and the Table) and
of a special reservation by ?ort'uL;al which would appear as a
footnote to uarajra;)h 20 in ..'art I O this re' )ort. tart IV
CI7f_(76)7 would be auendecf following the reduction that had
been agreed durin ' t.?e)resent session as regards the nueber of
1.e serva t Lo ns which needed to be :Iï A! 3 .
The Coi.ii ji tte e noted that .:u â t ralia and Portugal wished to
be recorded ;es considerin:; that the fact th;t a country had not
u d e an obee vati on on a Coi.. enta=y w er others had, did not 1.1ean
that this cu~ntry -reed with the intel-)retation given in the
Co,...eental'y whic:? )x'Cvel:Cr.. such. ocsorv::tions.
The Co=1r.,i.ttce then ado. 3tect the roort including the revisnd
nvcnv`ion thenceforth tu be calicc the '.:77 ::oc.el Convention)
and its Cou:_enta ries and agreed that it should be forwarded to
/ ounci
Council i wi h i. A,ro iosel that it sh e d be y)ußlis hed. The
Coi.u..ittee also suggested th-.t the :ode:. Convention should be
the subject Of a new ~ ~ ecol i,..C'tlC ~.tion j. ' the Council oi the 0.;CD,
al ong; the lines of the conclusions ofr the re)ort (76) 7,
art 17.
The Cu.:i:.ittec acreed ha :;:1 11:.'l jy . i.s of Dilaterai Doubl,
Ta nation Conventions signed ou tweeri 1st July , 1 G; and 1st July,
-;7J ûï.iori , u 1C s.eubor countrica /74.14 (1 st ilevisioTi)
and Corrigcnc1 j should be s or./ar ' o(.1 to the Council with a
Cer u6st foi.' derectriction.
 - 3 - CF!,' .i(77)1

The Coi:: ittee considered the proposed irogr ; u:..te of wor::

of i:oriting 1 art; No.1tî(76) 7 and agreed with its proposals.
In the first instance, wort, would continue an a Draft Convention
on fecioroca? Administrative _.ssistannce for the Collection of
Taxes (su:rject to co-ordination with the new :'sorhin; Party nn.
Tax Lvoidance and vision) and on abuse of tax conventions,
._ustri.a announced that a meeting of an in crual ï:orh.ing Group,
comprising, representatives from Austria, Dcl~iu4i, Denmar_:,
United;ingdora, United States and possibly Geruany, would be
held at 10.00 a.it. at the iiinistry of Finance in Vienna on
22nd march, 1977, to assess whether or not there is a need for
revising the 1 %6 Draft Double Conventions on :;states and
Inheritances and, if so, to make proposals to that end.
IV. SOCIAL A1r.i STATISTICAL0 ßû"% S~~~ r,
+r...wi..++..r. W
""r" TION
»:1►â
■ir r as — r r aw~i.*..a . w^~ r ■ 1

The Chairman of Z or_:ing Party 110.2 informed the Committee

of the recent ;publication of Tax i evenue Statistics 136!S-1974
which contained an annex on the Ta:/Lenefit Position of an
_verage Production Worker durin ; the years 1W2-1974 and of the
forthcoming _ïublication on the family unit.
As instructed by the Couuittee, the ï;ori:ing Party was
is to merge the :average 'Production :: or her and
r.la inc arrangements
Family Unit Studies and it was hoped that data for 1975 and 1975
would be ,resented to the Coi:_ii t tee at its January 1;70 meeting.
The Chairman also outlined the progress of ,ror': on the
taxation of financial assets anE houe ownershi.1, tax expenditures
and home ownershi4), capital taxation, social security taxation
and esti:aai,inL; me thodolozy. A report on the first two subjects
was expected to be submitted to the Committee on L iscal Affairs
in July 'F.:77. aïe also inforned the Com_it tee that the Œ.;CJ) list
of tc:_e; had been revised to enable greater conformity with
classifications of the I: an other international organisations,
and that data in the 1S77 edition of revenue statistics would
appear on this new basis.
V, T:.'.TIGii OF r.'ULri'1.LL TZn::_. J ,.: ITIS:1J
The Chairman of :lor_:ing Party ;TO.6 informed the Committee
that the Transfer Pricing; Group had reviewed the previous day
its report on the transfer of technology between associated
enterprises in the ford of patents and :avow-how and expected
that this would be ado+ited at its next session, subject to any
comments froï.i other uernbcrs of :, or i:ing } arty 110.6. He also
informed tao Committee that a ;.ieeting had been held with rep-
re eiite tiVes of the multinational entervrises under the aegis
C to discuss an earlier version of the redort and that
of D/ AC
input had also boon received froid one of the panels of the
meotiig of Taux IYitlpoctors. ;for:: had also begun on transfer
priCific practices in relation to services which the Group would
41â.ß:. oh next ns troll as mt,::in„ a start on transfers ei goods,
 CFl/T.i(77)1 -- 4 -

The Chairman recalled that the air.: of this vor_: is to achieve

better understanding of and a more consistent approach to,
transfer pricing policies by ta:: edruinistrations and mu'lti-
nationa? enterprises. The various papers being prepared could
be seen as constituting manual of practices in these Tatters.
The Committee agreed that the texts ähould not be published
until the worm. had been colepletcd and a suitable introduction
had been prepared to -)resent the results. In the meantime, it
would be useful if the Chairman of ;Torhing Party iTo.6 passed on
the finalised report on patents and :mow-how on an informal
basis to the :.iCCs3GC Group on tar: treaties between developed
and developing countries as had been done for the previous
paper on interest payments.
The secretariat informed the Committee of the new E andate
and cf current activities in the Committee on International
Investment and __uitinational :enter ;)rises.
T i
V L. PL'L
TT ~ VL~ ~~«:~i. z J.

The Chairman of er::ing Ilo.7 recalled that the

uandate el' the .: or'_:in„; 2ar t: covered four activities: e; cha nges
of ïnfori.:^tion which currently forieee part of the tax develop-
Dents discussed in the Committee it:ee?i.; a fact finding study
on the taxation of oil activities, a draft of which had been
circulated; the uJ-datin: • of ?nfor..ation on the taxation of
energy which would shortly be coi r aetod (1) ;; and a nuleber of
sjecific issues ;:hich the •..or::in: Party agreed should be cou-
In the circumstances, the Committee
p l ctcd by January 1973.
agreed that unless new developi ;ents made it desirable to suegest
a further =date, the ;:or'_:ing_arty could be disbanded as fror
January l f,7S, though this would not necessarily rule out e_:-
changes of views en the subject i_7 t.ie future in soiae inLorr.el
eee ,u ] on an ad hoc basis.
VIT.. f. U1.L i_L .

The Coi:.'.ittee decided to set ; 1'arty i o.i

a new ..ori_in‘
on Tie:: Lvcide:Ice and vasion with n 1_:andete "to exercise uenera1
coi.pc tence in all r iatte e ro_.:_ti'i: to te: avoidance and evasion
not specifically directed by thc Joii:.iittee to other 1: or?.ing
c_ ties'=. The ':orl:int; l':;rty would confine its activities for
the time bein,i; to direct taxe:. ..ï'. .:estcrourge7i ('ITethef ands )
,i end ,;:e. Ceuelot (France) would be ehairi.ian and Vice-Chairi.tan
of the :lor:.inü Varty res./actively. The Co1 :Lli ttee egrood that
it shoul.:: carry out its tror.: elon:; the linos eroposed by the
d hoc G . 1up on this subject in document CIT': ('7:: )1) and in pai -.
ticU , z:i shou/e, enint in e ina! :.nce between ti oiic:r, : e: i and
technical espeCte , as described in that document.

dalt44•41Li.60•AIL".44 ord.ill 4.1 .11A4.1. 414 Jo% al.

(1) : iee ere eeill ^'..c.1-1;C''. I:r an,2o 9

.ui .,;;; .j'1L. tltr.. JfitoC
 - 5 -- CFA/i•i (77 )1

The Copri ttee agreed that, in view of the success of the

tax inspectors meeting held in September, 1976, it would be
desirable to continue such meetings, the timing and subject
matter of which, should be decided during the first meeting of
Working Party No.8 which would consider how a second meeting
in September 1977 could be arranged.
It iras agreed that a questionnaire drafted by the Delegate
for the United States in consultation with the Delegate for
Sweden, acting as a Working Group, on the question of the
avoidance of taxation and shipping should be circulated to
iiember countries and that the results thereof should be sub-
mitted to Working Party No.0 when ready, in the form of a report
with suggested options for action.
VIII. T!'it Ds V.c1LOk'; t3TS T1d HALF OF 1976
The Coiin{ ttee held an exchange of views on the findings
of the GATT Panel in relation to DISC and the taxation of sales
activities as applied by Belgium, France and the Netherlands,
recent tax developments in Austria and the United States and the
new Danish and German corporation tax systems.
IX. BORDM TAX xi?JUSTP tITS
The Committee agreed that I:ember countries who had not
replied to the cluestionnairo shoilld be invited to do so, in
order that document DAF/CFA/76.26 could be completed(1) .
X. C OLLüCTIVIB IN
i VESTI• UNIT IITSTITUT1OII5

The Delegate for the .àetherlands informed the Committee

that comments from Delegates were awaited on a provisional
report and th::t it was headed that a final report could be
presented to the Committee at its July 1977 meeting.
XI. 0Ti i i BUSINLSS
The next session of the Committee will be held on
6th-7th July and on the uornina of 8th July, 1977, if the aLonda
when it was ready, appeared to warrant this.

(I) Tho following cour tri e s had not ro iiod : Austria, Canada,
Dofimar::, I t'ly, d!:pan, Ina::',uboiir ;, iiorway, Spain, Sweden
and Turkeys
CFA/14(77)1 -6

The following meetings of Working Parties and ad hoc

Groups have been arranged for the first half of 1977.

7th-8th February Steerii Group of tiIorkina Party

starting at 2.00 p.m.
9th--10th February
starting at 10.00 a. m.
2.
22nd-23rd February
starting at 10.00 a.m.
1st-3rd March,
starting at 10,00 a.ra.
21st-22nd April
starting at 10.00 e..zi.
26th-27th April, and possibly ;Torkinn; Party_ Imo 1 on Double
28th, starting at 10.00 a.m. Taxation
31 s t i::ay and 1st Jun ,
starting at 10.00 a.m.
2nd-3rd June,
starting at 10.00 a.:i.
3tri-9th June,
starting at 10.00
23rd-24th June,
starting at 10.00 a.m.
io,1 on Double Taxation
Working Group on Collective
Investment Institutions
irorkipg Party NoL8 on Tax
Avoidance and 3evasion
::Torn'ns Party Nora on Social
and Statistical Aspects of Taxation
Working, Group on Transfer Prices
ation
►Torkin; Group el Transfer Prices
,_x,us
Z t Group on Taxation of energy
1. orlon - Part No 2 on Social and
S a tistica_ Aspec s of Taxation
Uor4 n; Party iro,8 on Tax
Avoidance and evasion
 _7- CFA/K(77)1
Ann
11,i113).:
..wwr..rry
.
LIST OF Pi.ILTICIFAI•ITS
Chairman :

Mirs . A.H . SMALLWOOD Under-Secretary, Board of Inland

Revenue (United Kingdom)
AUSTRALIA
Mr. EVAIIS ` Permanent Delegation
A?.SSTRIA
flr. PHILLIP Director, Federal Ministry
of Finance
BELGIUM
Mr. SCHMITZ Directeur Général, Ministère des•
Finances
t r. COfEIyIANS Directeur, Ministère des Finances
Mr. BUBLOT Permanent Delegation
CANADA
Mr. G. COULOMBE Directeur Adjoint, Ministère des
Finances
Mr. J. COLEMAN Permanent Delegation
DLNTIARK
Tir . E. I'iOLL; IR Head of Division, Ministry of
Inland Revenue
Mrs. SNEUM* Head of Section, Ministry of Inland
Levenue
L INLAAD
Mr. L. HONI:AVA IA Head of Tax Department, Ministry of
Finance
T•ir. R. SODERHOLI•T Governmental Counsellor, Ministry
..
of Finance
nr. L. IO1INANEN Head of 3ection, Ministry of Finance
FRANCE
J . î. Chef da Service de la Legi>>lation,
Ministère de l'Economie et des
Finances
mr, Pi ana Directeur-Adjoint, Ministbre do
lf~äconomio of des Finances
Mr. A. CMTLLOT Administrateur Civils Ministare
do l tBoonoriie et des Finances
tx. da. COUPT Admini trrttour Civil, Iiinistbro
do 1 ticonomio et des Finances
CFA/M(77)1 C --
Jinnex

G RI'IATNIY
Mïr. T. MENCK Conseiller Ministcriel, Ministère
Fédéral des Finances
Mr. E. WEBER Conseiller, Ministère Fédéral des
Finances
rrr. FRICi3L Conseiller, Ministère F6d6ral
de 1=Economic
Mr. HOGRBV Permanent Delegation
GREECE
Mr. C. LEKKAS=' Chef de Division, Ministère des
Finances
Itr: J. PAVLIDIS= Rapporteur des Finances, Ministère
des Finances
Mr. C. GOTSIS Permanent Dolegation
IxLI :•ïD
Mr. J.F. I.ICHLEDSON Chairman, Revenue Commissioners
Mr. M.K. O' C ONNOR:` Con uissioncr, Revenue Commissioners
ITALY
Irr. DEL GIZZG Directeur G6n6ral, Ministère des
Finances
Nr. DEL GIUDICE Directeur de Division, Ministère
des Finances
Miss DE LOUIS Directeur de Division, I T4 nistère
des Finances
JAPAN
i4r. Y. Gaia Di=actor, International Tax Affairs,
Ministry of Finance
Mr. S. Il'::G'14U11.. Section Chief, International Tax
Stairs, Ministry of Finance
Mr. Y. =MAU 2crmancnt Delegation
LUXEMBOURG
Hr, J. OLINGER ijirecteur, Ministère des Finances
Mr. J. PIDIUtUT Directeur, ministère des Finances
fr.g131IFILLADS,
lir T 4 Mn= Director—General, Ministry of Finance
1144 L.J. GRI1 riG
i;N Director for Intcrnnti.onal Fiscal
Affairs, Ministry
stry of Finance
Mr, ei AU, ,,:i1STiii.1311RGM Inspector, Ministry of O inane
 9 - '
, 7)1

. :~~
NoR1rJJ GE
~wrw.r

Mr. L. SCHEEL Directeur-GCn6ral, I•Ii nistôre

Royal des Finances
Mr. B. HAUG Attorney General, Civil Affairs
PORTUGAL
I;r, R. P LRDAL Directeur GCn6ral, Ministbre des
Finances
I:rs. DE LOURDES conrai= Juriste, LIinistôre des Finances
E VALE
i'r. I'i. PIRES Juriste, t Iinistôre des Finances
SPAIN
Mr. A. IfiAItTIN 'Z--GENIGUE Sous-Directeur, Ministère dos
Finances
Mr. L. DEL ARCO RUETE SousDirecteur, i:Iinistère des
Finances
Mr. A. VIVANCOS Permanent Delegation
SWEEBN
Nr. Y. HLLLïH Ilead of Department, Ministry of
Budget
Mr. C.O. CLDLUBLAD head of Division, Iiini.stry of Commerce
SWITZERLAND.
Hr.. LOCHER Directeur, Ld iinistration FCdCrale
des Contributions
Irir. JEGUELIN SousDirecteur, cr "
Mr. GENDRE Chef de Division a U
Mr. WIDLB fl. Chef de Division ;' I,
Tiii :LY
Mr. 'r,fL Y. L;.; Permanent Delegation
UNITED KINGDOh
MD R B. POLLARD Assistant Secretary, International
Tax Policy Division, Board of
Inland revenue
Ip1t 4 4. ADAMS '-I. ;her 'executive Officer, Internationa:
T: Policy
.icy Division, Board of
Inland Revenue
CFL/f(77)1 — 10—

UHITEDS`fl_!..-S;;S
D.S. FOSTER Director, Office of International
Tax Affairs, United States Treasury
Mr. G. RUDNEY* Assistant Director, Office of Tax
Analysis, United States T.-easury
Mr. G. CARLSON* International ]economist, United
States Treasury
YUGOSLAVIA
ir. K. BOGOV Prof. do l =Universit6, Iîinistt)re
des Finances

Hr. R. GOBRGEN Direotour

Mr. G. SASS Chef du Division
I .i•i.F .
Vii'. R. GOODE Directors Fiscal Affairs Department
1fr. J. BJ T TJK:T Eurnv.an Office

SECILTARIAT
â 1.~. • ♦T li. ' lm n
* 1...Ii
. +~ • i1 Deputy Liructor, Directorate for
Financial and Fiscal l ff,irs
i•Ii'. J. GIL:il. Iload of Service, Directorate for
Financial and Fiscal Affairs
Hr. IC. I•I :S.SLI4: Bead of Tti:a tion Division, Directorate
for Financial and Fiscal Affairs
Hr. J. LLL NLRD ï'rincipa l Muinistrator, Ta:cation
Division, Directorate for Financial
and Fiscal Affairs
J. 01:1;:-.S Ac:r..inistrator, Tû;ration Division,
Directorate for Financial and
Fiscal :.ffairc

4 Members attending th.3 (lorrniittoe for the first time