G20 china_web

Financial regulation
The project
targets the
loopholes and
mismatches in
the international
tax system
Spearheading the
OECD’s BEPS Project
The OECD and the G20 are working together on an
Inclusive Framework in order to combat global tax
avoidance, writes Pascal Saint-Amans
are practically focused, providing policy
detail as well as tools for implementation,
including model provisions for tax treaties
and domestic legislation, templates and
practical guidance. They represent the
most significant reform of the international
tax system in a century and are expected
to address tax avoidance by multinational
enterprises conservatively estimated to cost
almost a quarter of a trillion dollars in lost
revenue annually on a global basis.
KEY TAKEAWAYS
The package addresses key issues
identified in the BEPS Action Plan
There are 85 countries and
jurisdictions participating
The Multilateral Competent
Authorities Agreement is now in place
This year, the Base Erosion and
Profit Shifting (BEPS) Project of
the Organisation for Economic
Co-operation and Development
(OECD) and the G20 remained
a significant focus for tax policymakers,
tax administrations as well as enterprises
and tax practitioners around the globe.
Launched in 2013 at the behest of G20
leaders, the project targeted the loopholes
and mismatches in the international tax
system that facilitate shifting corporate
profits away from the location of the
underlying economic activity and value
creation. After two years of working
with G20 members, the OECD delivered
a comprehensive package of anti-BEPS
measures in October 2015, which was
endorsed by the G20 leaders in November
2015 at their meeting in Antalya.
The package of BEPS measures
addresses three key issues identified in
the 2013 BEPS Action Plan: to ensure
that the substance of international tax
rules aligns taxation with the location
of economic activity and value creation,
establish coherence between domestic
tax systems and across the international
rules, and promote transparency including
with a view to increasing certainty and
predictability. The measures delivered
Going global
Setting the standards is, however, only the
starting point. The BEPS Project is now
moving into its implementation phase. G20
and OECD members have agreed this year
to enhance global engagement further by
creating a new framework that enables the
direct involvement on an equal footing of
interested countries and jurisdictions.
Thirty-nine new countries and
jurisdictions have joined the Inclusive
Framework on BEPS and have committed to
implement the BEPS package, bringing the
total number of countries and jurisdictions
participating in the project to 85, including
more than a dozen African countries. This
constitutes a milestone, noting that the
corporate income tax (CIT) revenue losses
are of particular concern for developing
countries, where the impact of BEPS, as a
percentage of tax revenues, is higher than
in developed countries given their greater
reliance on CIT revenues.
The mandate of the OECD and the G20
Inclusive Framework on BEPS focuses on the
review of implementation of the four BEPS
minimum standards in four areas – harmful
tax practices, tax treaty abuse, country-bycountry
reporting requirements for transfer
pricing purposes and improvements in
cross-border tax dispute resolution – while
monitoring implementation of the rest of
the BEPS package. It will also monitor new
developments relating to taxation of the
digital economy and measure the impact
of BEPS, as well as finalise the remaining
technical standard-setting work on the
BEPS package by 2017. The framework will
support countries in implementing the BEPS
PETER MACDIARMID/GETTY IMAGES
138 G20 China: The Hangzhou Summit • September 2016 G7G20.com