|“...We reiterate the need to prevent base erosion and profit shifting and we will follow with attention the ongoing work of the OECD in this area”
G20 Leaders Declaration of 19 June 2012, Los Cabos
Growing concern has been expressed regarding base erosion and profit shifting and for this reason the OECD has decided to address these issues.
The project, quickly known as BEPS (Base Erosion and Profit Shifting) is looking at whether, and if so why, the current rules allow for the allocation of taxable profits to locations different from those where the actual business activity takes place.
The aim is to provide comprehensive, balanced and effective strategies for countries concerned with base erosion and profit shifting.
The report Addressing Base Erosion and Profit Shifting presents the studies and data available regarding the existence and magnitude of BEPS and contains an overview of global developments that have an impact on corporate tax matters and identifies the key principles that underlie the taxation of cross-border activities, as well as the BEPS opportunities these principles may create.
The report concludes that current rules provide opportunities to associate more profits with legal constructs and intangible rights and obligations, and to legally shift risk intra-group, with the result of reducing the share of profits associated with substantive operations. The report recommends the development of an action plan to address BEPS issues in a comprehensive manner.
Frequently Asked Questions
Click here to view answers to the most frequently asked questions on BEPS
Key areas of work
There are number of key areas of work on which the Committee on Fiscal Affairs, through its subsidiary bodies, is currently focusing on. These include:
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BEPS by Masatsugu Asakawa
What the BEPS are we talking about?