BEPS - A Primer on Where it Came from and Where It’s Going

Governments throughout the world have been losing many billions of dollars of tax revenues from “legal” tax avoidance conducted by many multinational groups (MNEs) through aggressive structuring of operations and transactions that often lack economic reality so as to earn profits that are subjected to zero or low-taxation. The success of this “legal” tax avoidance motivated the G-20 and the OECD to initiate the two-year Base Erosion and Profit Shifting (BEPS) project, which took place from 2013 to 2015.This discussion of the BEPS project is intended to give the reader an understanding of the project's origin, its objectives, and how it may proceed in the future. It does not attempt to summarize in detail the specific results of the work on the project's 15 Action Plan items. Rather, only some brief comments are made on them to give the reader a flavor of the BEPS work undertaken by the OECD and the others who participated in this project. More specifically, the Primer includes:— Examples of MNE BEPS activities,— Description of how the environment strongly motivates BEPS behavior including both systemic issues and developments occurring over past decades,— Participants in the BEPS process,— Brief comments on the BEPS Project 15 Action Plan Items,— Results of the BEPS Project, and— Possible future developments