OECD/G20 Base Erosion and Profit Shifting Project

2313-2612 (online)
2313-2604 (print)
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Addressing base erosion and profit shifting is a key priority of governments around the globe. In 2013, OECD and G20 countries, working together on an equal footing, adopted a 15-point Action Plan to address BEPS. Beyond securing revenues by realigning taxation with economic activities and value creation, the OECD/G20 BEPS Project aims to create a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases while offering increased certainty and predictability to taxpayers. A key focus of this work is to eliminate double non-taxation. However in doing so, new rules should not result in double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity.

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Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report

Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report You or your institution have access to this content

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05 Oct 2015
9789264241190 (PDF) ;9789264241183(print)

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Preferential regimes continue to be a key pressure area. Current concerns are primarily about preferential regimes which can be used for artificial profit shifting and about a lack of transparency in connection with certain rulings. The report sets out an agreed methodology to assess whether there is substantial activity. In the context of IP regimes such as patent boxes, agreement was reached on the "nexus approach" which uses expenditures as a proxy for substantial activity and ensures that taxpayers can only benefit from IP regimes where they engaged in research and development and incurred actual expenditures on such activities. The same principle can also be applied to other preferential regimes so that such regimes are found to require substantial activity where the taxpayer undertook the core income generating activities.  In the area of transparency, a framework has been agreed for the compulsory spontaneous exchange of information on rulings that could give rise to BEPS concerns in the absence of such exchange. The results of the application of the existing factors applied by the FHTP, and the elaborated substantial activity and transparency factors, to a number of preferential regimes are included in this report.

Also available in French, German
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Table of Contents

Chapter 1. Introduction and background

Chapter 2. Overview of the OECD’s work on harmful tax practices

Chapter 3. Framework under the 1998 Report for determining whether a regime is a harmful preferential regime

Chapter 4. Revamp of the work on harmful tax practices: Substantial activity requirement

Chapter 5. Revamp of the work on harmful tax practices: Framework for improving transparency in relation to rulings

Chapter 6. Review of OECD and associate country regimes

Chapter 7. Further work of the FHTP

Annex A. Example of a transitional measure for tracking and tracing

Annex B. Spontaneous exchange on taxpayer-specific rulings under the framework

Annex C. Template and instruction sheet for information exchange

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