OECD Launches Action Plan On Base Erosion And Profit Shifting

The OECD released its Action Plan on Base Erosion and Profit Shifting (BEPS) on Friday. The BEPS initiative was launched earlier this year at the request of the G20 to counter alleged abuses by multinational corporations to artificially reduce income tax. The Action Plan is aimed to counter perceived weaknesses in international taxation that allow corporations to exploit mismatches in domestic tax regimes, take advantage of deficiencies in tax treaties, especially in the digital economy, and pursue aggressive transfer pricing.

The BEPS Action Plan is an ambitious plan with 15 actions that can be grouped into five main areas, intended to be addressed over a two-year timeframe:

1. Address tax challenges of the digital economy: The Action Plan calls for the establishment of a dedicated task force on the digital economy to analyze business models and value generators in this sector. It will cover direct and indirect taxation (income tax and sales/value-added tax).