OECD - After-tax hedging may threaten tax revenue 

March 14: The Organisation for Economic Co-operation and Development (OECD) today issued a report concerning the threat to countries' revenue base caused by “aggressive tax planning” based on after-tax hedging.

The OECD report [PDF 1.86 MB] - Aggressive Tax Planning Based on After-Tax Hedging - describes features of aggressive tax planning based on after-tax hedging, as well as the strategies used to detect and respond to such planning. The OECD report further highlights a number of challenges from a compliance and policy perspective.


According to the OECD report, not all after-tax hedging arrangements are aggressive, and after-tax hedging in and of itself is not an issue. An overall recommendation is that countries adopt a balanced approach in their response to after-tax hedging.


According to a related OECD release, a number of countries have encountered aggressive tax planning by taxpayers using after-tax hedging to achieve higher returns, without actually bearing the associated risk, which is in effect passed on to the government. The release states that any country that taxes the results of a hedging instrument differently from the results of the hedged transaction / risk is potentially exposed to such planning.




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