Base Erosion and Profit Shifting (BEPS)

Base Erosion and Profit Shifting (BEPS) is a global problem which refers to corporations who use tax avoidance strategies to exploit gaps in tax rules.

Base Erosion and Profit Shifting (BEPS) is a global problem which refers to corporations who use tax avoidance strategies to exploit gaps in tax rules. These companies artificially shift profits to low or tax-exempt locations which will result in little or no corporate tax having to be paid.

BEPS has become a significant and detrimental issue, particularly in third world countries, due to their considerable reliance on corporate income tax for economic sustainability.

BEPS is a global problem and requires a global solution. G20 and OECD countries have therefore worked with more than a dozen developing countries to develop a package that gives countries the tools they need to ensure that profits are taxed where the economic activities generating the profits are performed and where value is created, while standardising compliance requirements.

The BEPS Project is largely a corporate tax initiative, but may well have implications for families with an international spread of business interests. Practitioners who advise such families should therefore be aware of possible reporting requirements.

Useful resources

OECD information on BEPS