International Compliance Assurance Programme (ICAP)


What is ICAP?

The International Compliance Assurance Programme, or ICAP, is a voluntary programme that will use CbC Reports and other information to facilitate open and co-operative multilateral engagements between MNE groups and tax administrations, with a view to providing early tax certainty and assurance.


Focus: Launch of pilot programme

The ICAP pilot, which includes eight FTA member tax administrations, was launched in January 2018. A handbook which provides more detail on ICAP and the procedure for the pilot is now available.

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What are the benefits of ICAP for MNE groups and tax administrations?

ICAP will use information available to tax administrations for risk assessment, including CbC Reports, to facilitate a multilateral discussion between MNE groups and participating tax administrations, improving the effectiveness of current risk assessment processes and providing the following benefits to all parties.

  • A fully-informed and targeted use of CbCR information. The ICAP process will enable MNE groups to talk through their CbC Reports and provide clarity to aid understanding of their cross-border activities. This should help tax administrations to reach an early decision about the level of transfer pricing risk, permanent establishment risk and other specific international tax risks, if any, presented by the data contained in the CbC Report.

  • A more efficient use of resources and a co-ordinated approach to engagement. Tax administrations will jointly review the information supplied by an MNE group and will co-ordinate any follow-up questions. The MNE group can then engage with tax administrations simultaneously, often via the tax administration in its headquarter jurisdiction (the lead tax administration), rather than deal with separate enquiries.

  • A faster, clearer route to multilateral tax certainty. ICAP is a managed process with clear and ambitious timeframes. Working multilaterally, tax administrations will have a comprehensive picture of an MNE group’s cross-border activities, to gain assurance of the extent to which the group's tax position is satisfactory and that any relevant tax risks have been identified. This will be communicated clearly and promptly to the MNE group.

  • Fewer disputes entering into MAP.

What are the drivers of ICAP?

  • Better and more standardised information for transfer pricing risk assessment. As a result of BEPS Action 13, countries can now work from the same dataset to assess transfer pricing and other BEPS-related risks across multiple tax administrations. By enabling participating tax administrations to consult with each other and hold multilateral conversations with an MNE group, ICAP allows for a more robust and considered basis for risk assessment using this new data.

  • Well-established MNE compliance frameworks. The OECD's Forum on Tax Administration (FTA) has identified, developed and highlighted best practices in the areas of co-operative compliance, joint audits, tax control frameworks, and differentiated risk management. As such, tax administrations are well equipped to explore new approaches for multilateral tax risk assessment and assurance

  • Improvements to Mutual Agreement Procedures (MAP). More effective and efficient MAP processes are being implemented as part of BEPS Action 14. These initiatives will be supported by ICAP, to prevent unnecessary future disputes and limit MAP inventory growth.

  • Advances in international collaboration. Co-operation amongst FTA member tax administrations has vastly increased in both depth and frequency in recent years. Well-developed forums for international co-operation are already in place (e.g. JITSIC and LBIP) and these will be complemented by ICAP.

  • Providing a pathway to improved tax certainty for low or medium risk MNEs. ICAP can provide a pathway to greater international tax certainty for MNE groups and tax administrations alike, which is a positive BEPS-related outcome for MNEs wishing to be transparent and compliant. This also reflects the G20’s agenda on tax certainty that supplements the work on BEPS. 


What is the ICAP process?

ICAP is a voluntary process available to large MNE groups headquartered in participating jurisdictions. The application process may vary by jurisdiction, but an MNE group which wishes to participate will be asked to identify participating jurisdictions where it has activity and that it wishes to be included in a multilateral risk assessment. Tax administrations in these jurisdictions will then confirm whether they agree to participate in ICAP for that MNE group, taking into account factors such as the group's presence in their jurisdiction and its risk profile. The multilateral risk assessment conducted under ICAP will not cover all of an MNE group's tax issues but will focus on those associated with transfer pricing, permanent establishments and any other material international issues agreed between the group and participating tax administrations.

Once an MNE group's participation in ICAP is confirmed, the group will be asked to provide a package of documents, including its CbC Report, to the lead tax administration. This will be shared among tax administrations participating in the MNE group's ICAP risk assessment, together with any other information these tax administrations hold on the group for risk assessment or risk assurance purposes, based on existing legal exchange instruments. A meeting will be held with the group and all participating tax administrations to discuss the content of the CbC Report and other documentation, to ensure a full and consistent understanding of the group's profile and activities.

Following this meeting, an initial risk assessment will be conducted by each participating tax administration, to determine whether they can gain comfort the MNE group poses no or low risk in the areas covered by ICAP. If this is not the case, a more detailed and comprehensive risk assessment will be conducted. At all stages, participating tax administrations will work collaboratively and the MNE group will be kept informed via the lead tax administration. Following the conclusion of the risk assessment stage, a meeting will be held with the MNE group to discuss the outcomes of the assessment. To the extent a participating tax administration agrees an issue covered by ICAP represents no or low tax risk, an assurance letter will be issued setting out these findings, the content of which will vary by jurisdiction. The timeline for ICAP will depend upon a number of factors, but in most cases the period from the initial meeting to the issuance of assurance letters should be within 12 months.


What is the ICAP pilot?

ICAP will begin with a pilot, in which eight FTA member tax administrations (Australia, Canada, Italy, Japan, the Netherlands, Spain, the United Kingdom and the United States) will participate in the multilateral risk assessment of MNE groups with headquarters in one of their jurisdictions. A number of other FTA members will act as observers to the pilot, participating in discussions on the design and operation of the ICAP process, but will not participate in an MNE group's risk assessment and will not receive information on the groups involved. In conducting the pilot, there will be flexibility in terms of the profile of participating MNE groups, the timeline for the various stages in the ICAP process and the documentation to be provided by an MNE group, and other elements as they are identified.

International Compliance Assurance Programme Pilot Handbook The pilot was launched on 23 January 2018, at an orientation session to bring all participating MNE groups and tax administrations together. Lessons learned during the pilot will be shared with other FTA members, with a view to a possible broader roll-out of ICAP following the pilot.


Further information

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