OECD: Developing countries and BEPS

OECD: Developing countries and BEPS

The Organisation for Economic Co-operation and Development (OECD) today released a report addressing the role of developing countries with respect to the base erosion and profit shifting (BEPS) project.

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As noted in today’s OECD release [PDF 259 KB], the BEPS project is intended to address tax planning strategies that exploit gaps and mismatches in tax rules that, in turn, allow for profits to be artificially shifted to low or no-tax locations where there is little or no economic activity—with the result that little or no overall corporate tax is paid. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).

The OECD noted that over 80 developing countries and other non-OECD / non-G20 economies have been consulted at in-depth regional consultations and global sessions that were attended by more than 110 jurisdictions as well as representatives from civil society and the business community.

Strategy for developing countries

A related OECD release notes certain elements under the current strategy for developing countries:

  • Building on their engagement in the earlier phase of the BEPS project, about 10 developing countries—including Albania, Jamaica, Kenya, Peru, Philippines, Senegal and Tunisia—will be invited to participate in meetings of the key BEPS decision making body and technical working groups, and several other developing countries are expected to confirm their participation.
  • Five regionally organized networks of tax policy and administration officials will be established, to coordinate an ongoing and more structured dialogue with a broader group of developing countries on BEPS issues, with the networks to strengthen the involvement of developing countries in Asia, Africa, Central Europe and the Middle East, Latin America and the Caribbean, and Francophone countries.
  • Support to address and implement BEPS in developing countries will require involvement of the regional networks, and some of the priority issues for developing countries—e.g., tax incentives and transfer pricing comparable data—are outside the BEPS project.
  • The regional networks will also be a forum for discussing the negotiation and implementation of the multilateral instrument under Action 15 of the BEPS project.

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