What is BEPS

Responding to widespread public concerns and pressures, the G20 world leaders in July 2012 called for action to reform the international tax system. The task was referred to the Committee on Fiscal Affairs of the Organization for Economic Cooperation and Development (OECD), which set up a project on Base Erosion and Profit Shifting (BEPS).

After a year’s work, the OECD produced its Action Plan to address Base Erosion and Profit-Shifting. The BEPS Action Plan was approved by the G20 summit in Russia. The Tax Annex to the St Petersburg Declaration stated the following mandate for the BEPS project:

First, changes to international tax rules must be designed to address the gaps between different countries’ tax systems, while still respecting the sovereignty of each country to design its own rules.

Second, the existing international tax rules on tax treaties, permanent establishment, and transfer pricing will be examined to ensure that profits are taxed where economic activities occur and value is created.

Third, more transparency will be established, including through a common template for companies to report to tax administrations on their worldwide allocation of profits and tax.

Fourth, all the actions are expected to be delivered in the coming 18 to 24 months.

Developing countries must reap the benefits of the G20 tax agenda.

The OECD Action Plan contained 15 Actions. Discussion drafts have been issued for all these, and the BMG has submitted response to all of them, available on this site. The first package of outputs was released in September 2014, and in response the BMG published a BEPS Scorecard, also available here. The final package is due to be published on 5 October 2015, and the BMG will publish a General Evaluation of the BEPS Project at the same time.

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2 thoughts on “What is BEPS

    1. bepsmg Post author

      The intention, we believe, is for the OECD Council to adopt all the BEPS reports as an OECD Recommendation. Although this is not binding in international law, under OECD practice member states are expected to implement such Recommendations in good faith, unless they make an explicit reservation. This can sometimes happen, e.g. when the OECD first adopted a report recommending an end to bank secrecy, Luxembourg and Switzerland stated reservations.

      Reply

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