OECD released first recommendations for realizing the Action Plan on base erosion and profit shifting

OECD released first recommendations for realizing the Action Plan on base erosion and profit shifting

On September 16, 2014 the OECD has released its first recommendations for realizing the Action Plan on Base Erosion and Profit Shifting (BEPS) designed to combat schemes used by multinational enterprises for lowering tax base and shifting profits. 

To be reminded, the BEPS Action Plan was endorsed by the G20 in July 2013 and sets out 15 key elements to be addressed in the frame of combating schemes used for tax evasion and shifting profits to offshore locations. The BEPS Action Plan provides fulfillment of requirements addressed to a number of countries to change national tax legislation and international double taxation treaties.

The OECD first recommendations for realizing the BEPS Action Plan published provide an overview of the seven BEPS key elements. For instance, explanatory statement on how to prevent the abuse of intended tax benefits of international double taxation treaties, how to improve transparency for tax administration, how to improve control over transfer pricing.

The recommendations provide a three-level list of the documentation relating to transfer pricing for multinational companies: a basic documentation, including information on global operations and approaches to transfer pricing; a local documentation to be submitted to the tax authorities of the countries concerned, including information on transactions relating to a particular country, revenue, profit or loss before tax etc.; a report on the financial and other indicators in the context of the countries in which the activities are carried out.

The OECD recommendations were agreed after an intensive consultation process between OECD, G20 and developing countries. The recommendations will be a key item on the agenda when G20 convene at meeting on 20-21 September in Cairns, Australia.  

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