NATIONAL tax laws
have not kept pace with the globalisation of corporations and the digital
economy, leaving gaps that can be exploited by multi-national corporations
to artificially reduce their taxes.
OECD's Action Plan on Base Erosion and Profit Shifting (BEPS) offers a global
roadmap that will allow governments to collect the tax revenue they need to
serve their citizens. It also gives businesses the certainty they need to invest
and grow.
Produced at the request of the G20 and introduced at the G20 Finance Ministers’
meeting in Moscow, the Action Plan identifies 15 specific actions that will
give governments the domestic and international instruments to prevent corporations
from paying little or no taxes.
"This Action Plan, which we will roll out over the coming two years,
marks a turning point in the history of international tax co-operation. It
will allow countries to draw up the co-ordinated, comprehensive and transparent
standards they need to prevent BEPS,” said OECD Secretary-General Angel Gurría.
“International tax rules, many of them dating from the 1920s, ensure that businesses
don’t pay taxes in two countries – double taxation. This is laudable, but unfortunately
these rules are now being abused to permit double non-taxation. The Action
Plan aims to remedy this, so multinationals also pay their fair share of taxes.
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