OECD BEPS Action Plan Status Update Report – December 2017
The Base Erosion and Profit Shifting (BEPS) Project is an ongoing project headed by the OECD that aims to set up an international framework to combat tax avoidance by multinational enterprises (MNEs). The project, under the jurisdiction of the OECD’s Committee on Fiscal Affairs, began in 2013 and originally only involved OECD and G20 countries.
The aim of the project is to mitigate tax code loopholes and country-to-country inconsistencies so that corporations cannot shift profits from a country with a high corporate tax rate to countries with a low tax rate, known as tax havens. The practice is usually legal, but often involves complex manoeuvres within tax law. BEPS is costly for all parties involved, save the firm. A conservative estimate has annual tax revenue losses at 240 billion USD due to profit shifting around the globe.
In October 2015, after two years of negotiations and development, a 15-point Action Plan was announced by the OECD and G20 to address BEPS. However, at a conference in 2016, it was deemed necessary that for an effective international tax framework, developing countries must be involved. To gain membership, non-OECD/G20 countries must commit to the BEPS package, a plan to “equip government with domestic and international instruments to address tax avoidance, ensuring that profits are taxed where economic activities generating the profits are performed and where value is created.” All countries in the framework work on equal footing to set minimum standards for the international tax framework. The package consists of 15 action plans that standardize tax codes, treaties, and data sharing, among other provisions. As of 3 January 2018, Mongolia became the 111th member that signed on to the project.
Following its third survey in June 2017, PKF is delighted to now provide its fourth survey which presents the further progress of various countries in adopting the OECD BEPS measures as at December 2017.
A copy of the ‘PKF OECD BEPS Action Plan Status Update Report – December 2017’ may be obtained from the link below.
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