The OECD has agreed a new framework that would allow all interested countries and jurisdictions to join in efforts to update international tax rules. The proposal for broadening participation in the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project will be presented to G20 Finance Ministers this week (on 26-27 February) in Shanghai, China.
This new forum will provide for all interested countries and jurisdictions to participate as BEPS Associates in an extension of the OECD’s Committee on Fiscal Affairs (CFA). As BEPS Associates, they will work on an equal footing with the OECD and G20 members on the remaining standard-setting under the BEPS Project, as well as the review and monitoring of the implementation of the BEPS package.
The BEPS Project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to ‘disappear’ or be artificially shifted to low or no tax environments, where companies have little or no economic activity.
Revenue losses from BEPS are conservatively estimated at $100-240 billion annually, or 4-10 percent of global corporate income tax (CIT) revenues. Given developing countries’ greater reliance on CIT revenues, the impact of BEPS on these countries is particularly damaging.
“Drawing on the G20’s leadership, countries worldwide are working closer than ever to shut down the loopholes that facilitate tax avoidance,” said OECD Secretary-General Angel Gurría.
“The plan we are presenting today will create the largest and most inclusive forum for discussions and decisions on implementing the BEPS measures and ensuring a stronger and fairer international tax system. It is another strong signal that behaviour which was considered both legal and normal in the past will no longer be accepted.”
OECD, Tax, Angel Gurria, Cayman