BEPS: OECD/G20 project against Base Erosion and Profit Shifting

​On 5th October 2015, after more than two years of work, the OECD released the final package against ”Base Erosion and Profit Shifting” (BEPS). The initiative between the OECD and the G20 members was formed as a reaction to an increase in fiscal challenges that governments have been faced with. Especially multinational enterprises were under massive public criticism in the last couple of years. They are supposedly using loopholes in domestic tax systems in order to reduce their taxable base and/or to shift their profits to countries with low tax rates. The OECD estimates that the worldwide annual loss of potential tax revenue is around 100 to 240 billion USD.
 
In response to this challenge the OECD/G20 states established working-groups in respect to 15 action points. The BEPS Action plan addresses, among other things, topics regarding

• base erosion,
• profit shifting and
• the prevention of double taxation

 

​Action 1:	​Addressing the Tax Challenges of the Digital Economy
​Action 2:	​Neutralising the Effects of Hybrid Mismatch Arrangements
​​Action 3:	​Designing Effective Controlled Foreign Company Rules
​​Action 4:	Limiting Base Erosion Involving Interest Deductions and Other Financial Payments
​​Action 5:	​Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance
​Action 6:	​Preventing the Granting of Treaty Benefits in Inappropriate Circumstances
​​Action 7:	​Preventing the Artificial Avoidance of Permanent Establishment Status
​​Action 8–10:	Aligning Transfer Pricing Outcomes with Value Creation
​​Action 11:	​Measuring and Monitoring BEPS
​Action 12:	Mandatory Disclosure Rules
​​Action 13:	Guidance on Transfer Pricing Documentation and Country-by-Country Reporting
​Action 14:	Making Dispute Resolution Mechanisms More Effective
​Action 15:	​Developing a Multilateral Instrument to Modify Bilateral Tax Treaties

 

Some final outcomes of the BEPS project with special regard to transfer pricing are summarized in the following articles.