KSA Pilot Project Summary: Base Erosion and Profit Shifting (BEPS) and Developing Countries


BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs). Engagement with developing countries has thus been extensive since the beginning of the Project to strengthen their involvement and bring them to the heart of the technical work. In the first year of the project, over 80 developing countries and other non-OECD/non-G20 economies have been consulted through four in-depth regional consultations and five thematic global fora. In November 2014, the OECD launched a new strategy for deepening developing countries’ engagement in the BEPS Project that is based on three pillars:


  • Direct participation in the Committee on Fiscal Affairs (CFA) and its subsidiary bodies. 14 developing countries (Albania, Azerbaijan, Bangladesh, Croatia, Georgia, Jamaica, Kenya, Morocco, Nigeria, Peru, Philippines, Senegal, Tunisia and Viet Nam) and two key regional tax organisations – i.e. African Tax Administration Forum (ATAF) and Inter-American Centre for Tax Administrations (CIAT) –have directly attended and participated in the meetings of the key BEPS decision making body (CFA) and its technical working groups. Two Global Forum meetings on transfer pricing and tax treaties were held.


  • Regional Network meetings of tax policy and administration officials. Five regional networks of officials working in tax policy and administration have been established for the Asia-Pacific region, Africa (both English and French speaking parts), Eastern Europe and Central Asia region, and for Latin America and the Caribbean. During these interactions, developing countries’ officials provided input into the BEPS Project, discussed ways to implement measures while adapting them to different levels of capacity and identified additional issues faced by them. This has allowed partner countries to influence the outputs of the BEPS Project, e.g. in the field of transfer pricing aspects of commodity transactions and of low value adding services, as well as on common approaches to limit base erosion via interest deductibility.


  • Capacity building support. With capacity building constantly highlighted as a key topic by developing countries throughout the consultation process, the OECD Secretariat, in cooperation with other international and regional organisations, will develop toolkits in order to support the practical implementation of the BEPS measures as well as other priority issues identified by developing countries (such as tax incentives and lack of comparable data for transfer pricing purposes). Reports and toolkits will cover tax incentives (by November 2015), transfer pricing comparables (by December 2015), indirect transfers of assets (by March 2016) and transfer pricing documentation requirements (by June 2016), strengthen capacity development on treaty negotiation (by December 2016), base eroding payments between MNEs affiliates (by June 2017), artificial profit shifting through supply chain restructuring (by December 2017), and the successful implementation of assessment of BEPS risks (by December 2017).


KSA supported knowledge sharing activities of the BEPS and Developing Countries project for 2015, and helped ensured effective participation of low and middle income countries in regional policy network meetings including the Regional Network Meetings on the BEPS Project in Asia-Pacific (12-13 February in Seoul, Korea) Latin America and the Caribbean (26-27 February in Lima, Peru) organised in partnership with the Inter-American Centre of Tax Administrations (CIAT). The KSA’s support has also facilitated knowledge sharing among OECD and developing countries at the OECD Global Forum on Transfer Pricing on 16-18 March 2015, as well as the participation of low-income country participants to BEPS meetings for the Task Force on Tax and Development and for the Task Force on the Digital Economy.


The Project received positive feedbacks from its partner countries about their enhanced engagement on BEPS. The evidence is clear: the negotiations to implement the treaty-based measures via a multilateral instrument (to be finalised in 2016) are being undertaken in 95 jurisdictions, many of which are developing economies, on an equal footing. Toolkits are being prepared to ensure that low-income countries can implement and apply the BEPS measures in a swift manner and that other issues which are key to developing countries (e.g. wasteful tax incentives and lack of comparables) are addressed, even if not included in the scope of the BEPS Project. Finally, at the request of the G20, an inclusive framework, where all interested jurisdictions participate on an equal footing, is being designed; a proposal in this respect will be submitted to the G20 in early 2016. The Project has clearly demonstrated the importance and the benefit of involving developing countries in the process, as well as their need for both technical and in some case financial support.

For further information, please visit the Project Homepage.  


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