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Ending
offshore profit
shifting
COMBATING
INTERNATIONAL #TAX
AVOIDANCE
Better coordinated international
tax rules and greater information
sharing between countries make
it more difficult for multinationals
to artificially shift profits offshore
to pay little or no tax.

READ THE IMPACT STORY ON OECD.ORG

OECD Centre for Tax Policy and Administration

ctp.contact@oecd.org

What's the issue?

Base erosion and profit shifting (BEPS) is a long phrase for a
succinct tax problem: multinational enterprises exploit gaps
and mismatches in the international tax rules to artificially
shift profits to low or no tax jurisdictions, and avoid paying
their fair share of tax. Examples involving famous brands
have filled the headlines in recent years, spurring public and
political outrage. But these tax avoidance strategies were in
most cases legal, and largely overlooked until the OECD/G20
BEPS Project. Multinationals were taking advantage of tax
rules that were not well co-ordinated across countries and
which had not been updated for a global and digitalised
economy.

However, BEPS is bad for everyone: governments, citizens

and business alike. Governments lose much needed funds:
conservatively estimated at around 4-10% of global
corporate income tax revenues, or USD 100-240 billion
annually; money that could be spent on education, health
care, infrastructure, pensions. Citizens lose out either by
having to foot the bill through higher taxes for services that
would otherwise have been funded by corporate income tax
revenues, or going without those services. Purely domestic
businesses have a hard time competing with multinational
enterprises that can lower their tax bills by shifting profits
offshore.

How are we addressing it?

The OECD/G20 BEPS Project was born in the wake of the
global financial crisis, shrinking public budgets and growing
public outcry over BEPS. In 2015, OECD and G20 countries –
along with other stakeholders – created a package of 15
actions and related solutions to tackle BEPS. Since then, the
work has continued and the number of countries involved
has grown, with over 125 jurisdictions today working
together on an equal footing in the Inclusive Framework on
BEPS. They are now tackling the tax challenges of the
digitalisation of the economy and expect to deliver a solution
by the end of 2020.

Key areas of action to tackle BEPS include:

Stopping the inappropriate transfer of profits between

multinationals’ subsidiaries in different countries
[video]
Helping countries to collect VAT more effectively in
today’s digital world [video]
Providing a template for multinationals to report,
country by country, where their profits, sales, employees
and assets are located, and where they pay tax [video]
Eliminating treaty shopping between jurisdictions
[video]
 Facilitating swift implementation of the BEPS measures
through a new multilateral instrument [video]

“ The OECD’s base erosion

and profit shifting (BEPS)
project has made
unprecedented progress in
tackling all such practices of
transferring activities for tax
purposes.
Emmanuel Macron, President of France
“
Key figures
125+
Countries and jurisdictions
2015
Year OECD, G20 countries,
85+
Jurisdictions signed the
taking part on an equal and key stakeholders Convention to Implement
footing in the Inclusive created a package of 15 Tax-Treaty Related
Framework on BEPS actions to tackle BEPS Measures to Prevent BEPS

What's the impact?

The OECD/G20 BEPS Project is the most ambitious
multilateral international tax policy initiative ever undertaken.
Ensuring fairness, coherence, transparency and that taxation
is aligned with where economic activity takes place, in the
vastly complex space of international tax provisions
covering virtually all of the world’s economic activity requires
enormous effort and commitment.

Significant milestones have been reached, leading to an

important shift in practices both by policy makers and
multinational corporations.

More than 125 countries and jurisdictions are taking part on

an equal footing in the Inclusive Framework on BEPS ,
and 85+ countries and jurisdictions have signed the
Multilateral Convention to Implement Tax-Treaty Related
Measures to Prevent BEPS. The Convention saves
governments time by eliminating burdensome one-on-one
negotiations, which take years to finalise, and helps
countries to effectively implement the recommendations of
the BEPS Project, closing loopholes in thousands more tax
treaties.

Strengthening tax treaties to fight tax avoidance

Information exchange
Information is increasingly being exchanged on a regular
basis across borders. More than 2 000 bilateral relationships
are already in place for Country-by-Country reporting which
has resulted in tax administrations worldwide collecting and
sharing detailed information on all large MNEs doing
business in their country. Exchanges of information on 21
000+ previously secret tax rulings have also taken place,
ensuring greater transparency of the arrangements between
tax administrations and taxpayers.
 Harmful preferential tax regimes have also been addressed,
with legislative changes made to amend/abolish 110+ of
these regimes, representing a major step forward in tackling
artificial profit shifting.

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