handbook-tb

Protecting the tax base of developing countriesincome to be taxed in a country other than the country in whichthe value from economic activities is created;‣ ¾ The lack of effective anti-avoidance measures such as GeneralAnti-Avoidance Rules (GAAR), Controlled Foreign Corporation(CFC) regimes, thin capitalization rules and anti-treaty shoppingrules; and‣ ¾ The availability of harmful preferential regimes.The OECD Report on Addressing BEPS went on to examine thetechniques that multinational corporations use to exploit these “pressurepoints” to achieve base erosion and profit shifting.As a result of this “diagnosis,” the OECD Report on AddressingBEPS concluded that what was needed was a comprehensive “globalaction plan” to deal with the many interrelated strands that lead tobase erosion and profit shifting. Accordingly, the OECD developeda comprehensive plan that was presented to the G20 leaders at theirmeeting in July 2013, where it was fully endorsed. 51.2.2 OECD Action Plan on BEPSThe OECD Action Plan on BEPS sets out 15 Actions to carry out themandate of the G20:(1) Address the tax challenges of the digital economy;(2) Neutralize the effects of hybrid mismatch arrangements;(3) Strengthen the controlled foreign company (CFC) rules;(4) Limit base erosion via interest deductions and other financialpayments;(5) Counter harmful tax practices more effectively, taking intoaccount transparency and substance;(6) Prevent treaty abuse;(7) Prevent the artificial avoidance of permanent establishment(PE) status;5G20 Leaders’ Declaration, (St. Petersburg, 6 September 2013), paragraph20, available at https://g20.org/wp-content/uploads/2014/12/Saint_Petersburg_Declaration_ENG_0.pdf.3