OECD Base Erosion and Profit Shifting project

March 1, 2013

The OECD’s website indicates that the Base Erosion and Profit Shifting project “is looking at whether, and if so why, MNEs taxable profits are being allocated to locations different from those where the actual business activity takes place.”

Based on the findings of an initial environmental scan, the OECD plans to implement what they describe as an “integrated and holistic approach to improve the concrete tools it has to address base erosion and profit shifting”.

According to their website key areas of work of the OECD in which this is a current focus include:

  • Harmful tax practices
  • Aggressive tax panning
  • Transfer pricing
  • Tax treaties
  • Tax policy and statistics
  • Tax and development
  • Tax Compliance

The OECD has set out their objective as providing “comprehensive, balanced and effective strategies for countries concerned with base erosion and profit shifting”.

The OECD states that essential elements of this framework include the arm’s length principle and the elimination of double taxation as well as the elimination of inappropriate double non-taxation, “whether that arises from aggressive strategies put in place by taxpayers or from tax policies introduced by national governments”.

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