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Base Erosion and Profit Shifting (BEPS) Action Plan
Minimum standards for parts of the international tax system were agreed under the base erosion and profit shifting (BEPS) Action Plan as part of recommendations published in October 2015. The BEPS Inclusive Framework (IF) comprises around 130 countries committed to implementing those minimum standards – see the list of IF members on the OECD website. Alongside the minimum standards, which applied to elements of four of the fifteen action items, there were identified a number of best practices and areas for greater alignment.
Work stemming from the BEPS Action Plan
- Further BEPS work
- Tax Platform toolkits
- Implementation of minimum standards (for all IF countries)
- Other significant issues
Further BEPS work
- IF countries are participating on an equal footing in follow-up work to the BEPS Action Plan, including financial transactions
- The Action 1 recommendations have grown into a much broader project on the taxation of the digitalisation of the economy, on which extensive work is being carried out
Tax Platform toolkits
- The Platform for Collaboration on Tax comprises the UN, IMF, World Bank and OECD
- This Tax Platform is developing a series of toolkits
- The main aim is to assist “lowest income countries” in implementing the outcomes of the BEPS Project, so far as they are relevant to those countries or to address related issues
Implementation of minimum standards (for all IF countries)
- Harmful tax practices, including exchange of rulings (minimum standard)
- Treaty abuse, including the Principal Purpose Test (minimum standard)
- Country-by-country reporting (minimum standard)
- Dispute resolution via mutual agreement procedures (minimum standard)
Other significant issues
- Multilateral instrument (MLI) for effecting treaty-based BEPS changes
- The EU’s Mandatory Disclosure Regime (DAC6)
- The EU’s Anti Tax Avoidance Directive (ATAD)
The BEPS Project had been initiated by the G20 countries but it effectively also encompassed the other OECD Member States from the outset. As the project progressed, engagement in the discussions was extended to other large non-OECD states and representatives of developing countries. PwC submitted a large number of responses in relation to the various BEPS proposals put forward action by action. The OECD published over 1600 pages in the ‘final’ reports in relation to all 15 BEPS Action items in October 2015 and the wider range of IF countries became individually involved.
BEPS Action Plan: Action 1 - The digital economy |
BEPS Action Plan: Action 2 - Hybrid mismatch arrangements |
BEPS Action Plan: Action 3 - Controlled foreign companies (CFC) regimes |
BEPS Action Plan: Action 4 - Financial payments |
BEPS Action Plan: Action 5 - Harmful tax practices |
BEPS Action Plan: Action 6 -
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BEPS Action Plan: Action 7 - Permanent establishment (PE) status |
BEPS Action Plan: Action 8 - Transfer pricing and intangibles |
BEPS Action Plan: Action 9 - Transfer pricing and risks/ capital |
BEPS Action Plan: Action 10 - Transfer pricing and other high-risk transactions |
BEPS Action Plan: Action 11 - Data and methodologies |
BEPS Action Plan: Action 12 - Disclosure of aggressive tax planning |
BEPS Action Plan: Action 13 - Transfer pricing documentation |
BEPS Action Plan: Action 14 - Dispute resolution mechanisms |
BEPS Action Plan: Action 15 - A multilateral instrument |
It may take some while for the impact of these recommendations to be fully applied in practice, but the BEPS Project and related developments are constantly leading to the need for business to take action (in some cases, urgent action) both to comply with new requirements and to consider the ways in which they do business in different countries.
Latest key comments on BEPS
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