Digitalisation and globalisation have had a profound impact on economies and the lives of people around the world, and this impact has only accelerated in the 21st century. These changes have brought with them challenges to the rules for taxing international business income, which have prevailed for more than a hundred years and created opportunities for base erosion and profit shifting (BEPS), requiring bold moves by policy makers to restore confidence in the system and ensure that profits are taxed where economic activities take place and value is created.
In 2013, the OECD ramped up efforts to address these challenges in response to growing public and political concerns about tax avoidance by large multinationals. The OECD and G20 countries joined forces and developed an Action Plan to address BEPS in September 2013. The Action Plan identified 15 actions aimed at introducing coherence in the domestic rules that affect cross-border activities, reinforcing substance requirements in the existing international standards, and improving transparency as well as certainty.
After two years of work, measures in response to the 15 actions, including those published in an interim form in 2014, were consolidated into a comprehensive package and delivered to G20 Leaders in November 2015. The BEPS package represents the first substantial renovation of the international tax rules in almost a century. The implementation of BEPS measures strengthens the international tax system by ensuring that BEPS planning strategies identified that relied on outdated rules or on poorly co-ordinated domestic measures have been rendered ineffective.
OECD and G20 countries also agreed to continue to work together to ensure a consistent and co-ordinated implementation of the BEPS recommendations and to make the project more inclusive. As a result, they created the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework), bringing all interested and committed countries and jurisdictions on an equal footing in the OECD Committee on Fiscal Affairs and its subsidiary bodies. With over 145 members, the Inclusive Framework monitors and peer reviews the implementation of the minimum standards and is advancing the work on standard setting to address further BEPS issues. In addition to its members, other international organisations and regional tax bodies are involved in the work of the Inclusive Framework, which also consults business and the civil society on its different work streams.
The work to address BEPS has also led to further consideration of the tax challenges arising from the digitalisation of the economy. In October 2021, over 135 Inclusive Framework members agreed to a political statement on the Two-Pillar Solution to reform aspects of the international taxation rules in order to ensure that the profits of multinational enterprises are fairly taxed in today’s digitalised and globalised world economy. That work has made significant advances in developing a co-ordinated system for reallocating taxing rights to market jurisdictions with respect to a defined portion of the residual profits of the largest and most profitable Multinationals (the Multilateral Convention to implement Amount A of Pillar One). The work has also resulted in an agreement on simplified and streamlined transfer pricing methodologies for certain baseline distribution activities which were incorporated into the Transfer Pricing Guidelines as of February 2024 (Pillar One Amount B). Furthermore, jurisdictions are making treaty changes to allow developing countries to charge a minimum rate on certain intra-group cross-border payments (Pillar Two Subject-to-Tax Rule); and a jurisdictional 15% minimum effective tax rate framework has been implemented by more than 55 jurisdictions as of the beginning of 2025 (Pillar Two GloBE Rules).
This work continues, and at their its meeting in April 2025, Inclusive Framework members reiterated the critical importance of securing certainty and stability in the international tax system from the ongoing work on BEPS and the Two-Pillar Solution.
This report was approved by the Inclusive Framework on BEPS on 1 September 2025 and prepared for publication by the OECD Secretariat.