Base Erosion and Profit Shifting (BEPS) is a problem faced by Governments due to the change in the landscape of economic transactions and the impact of the global village on the management of a business.
In 2013, OECD and G20 countries worked together to create a 15 Point Action plan to address BEPS. BEPS Action Plan aims to ensure profits are taxed where economic activities generating the profits are performed and where value is created.
The 15 Action Plans are as follow:
Action Plan 1: Tax Challenges arising from digitalization
Action Plan 2: Neutralizing the effects of hybrid mismatch arrangements.
Action Plan 3: Controlled Foreign Company
Action Plan 4: Limitation on Interest deductions
Action Plan 5: Harmful Tax practices
Action Plan 6: Prevention of tax treaty abuse
Action Plan 7: Permanent Establishment status
Action Plan 8-10: Transfer Pricing
Action Plan 11: BEPS Data Analysis
Action Plan 12: Mandatory Disclosure Rules
Action Plan 13: Country by Country Reporting
Action Plan 14: Mutual Agreement Procedure
Action Plan 15: Multilateral Instrument
In our future posts, we will write in detail about these action plans.