Corporate Taxation and BEPS: A Fair Slice for Developing Countries?

Article English OPEN
Burgers, Irene ; Mosquera, Irma (2017)

textabstractThe aim of this article is to examine the differences in perception of ‘fairness’ between developing and developed countries, which influence developing countries’ willingness to embrace the Base Erosion and Profit Shifting (BEPS) proposals and to recommend as to how to overcome these differences. The article provides an introduction to the background of the OECD’s BEPS initiatives (Action Plan, Low Income Countries Report, Multilateral Framework, Inclusive Framework) and the concerns of developing countries about their ability to implement BEPS (Section 1); a non-exhaustive overview of the shortcomings of the BEPS Project and its Action Plan in respect of developing countries (Section 2); arguments on why developing countries might perceive fairness in relation to corporate income taxes differently from developed countries (Section 3); and recommendations for international organisations, governments and academic researchers on where fairness in respect of developing countries should be more properly addressed (Section 4)
  • References (116)
    116 references, page 1 of 12

    1. G20 Leaders Declaration meeting in St. Petersburg including the Tax Annex to G20 leaders declaration; see <https://www.oecd.org/g20/ summits/saint-petersburg/Tax-Annex-St-Petersburg-G20-LeadersDeclaration.pdf> (last visited 22 March 2017).

    2. See 'About BEPS and the inclusive framework', <www.oecd.org/tax/ beps-about.htm> (last visited 22 March 2017). Fairness is one of the tax principles the OECD formulated in its Ottawa Tax Framework, as revised in 2005 by the OECD Technical Advisory Committee (TAC). As to the OECD, 'this principle implies that the potential for tax evasion and avoidance should be minimised while keeping counteracting measures proportionate to the risks involved'. OECD, Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project (2015), at 17; see <http://dx.doi.org/10.1787/9789264241046-en> (last visited 22 March 2017).

    3. OECD, Action Plan on Base Erosion and Profit Shifting (2013), at 8; see<http://dx.doi.org/10.1787/9789264202719-en> (last visited 22 March 2017).

    4. The European Commission Recommendation of 6 December 2012 on Aggressive Tax Planning C (2012)8806 Final, at 2.

    5. OECD, above n. 3, at 8.

    9. In the first part of the Report, the OECD evaluates the impact of the Action Plan in Low Income Countries and it adds other issues that should be considered for these countries that are not included in such action plan (e.g. use of tax incentives by developing countries). In the second part of the Report, the OECD presents the potential actions to assist developing countries to meet the challenges of the most relevant actions of BEPS. OECD, Part 1 of a Report to G20 Development Working Group on the Impact of BEPS in Low Income Countries (2014); see <https://www.oecd.org/g20/topics/taxation/part-1-of-report-to-g20- dwg-on-the-impact-of-beps-in-low-income-countries.pdf> (last visited 22 March 2017). OECD, Part 2 of a Report to G20 Development Working Group on the Impact of BEPS in Low Income Countries (2014); see <https://www.oecd.org/g20/topics/taxation/part-2-of-report-to-g20- dwg-on-the-impact-of-beps-in-low-income-countries.pdf> (last visited 22 March 2017).

    10. According to the reporters of medium importance are: - Action 1 - Address the tax challenges of the digital economy; - Action 5 - Counter harmful tax practices more effectively; - Action 8 - Assure that transfer pricing outcomes are in line with value creation - intangibles; - Action 9 - Assure that transfer pricing outcomes are in line with value creation - risks and capital; - Action 12 - require taxpayers to disclose their aggressive tax planning arrangements; - Action 14 - Make dispute resolution mechanisms more effective; and of low importance for developing countries are: - Action 2 - Neutralise the effects of hybrid mismatch arrangements; - Action 3 - Strengthen controlled foreign company rules; - Action 15 - Develop a multilateral instrument.

    11. OECD (2014), above n. 9, at 9; see <https://www.oecd.org/g20/ topics/taxation/part-1-of-report-to-g20-dwg-on-the-impact-of-beps-in -low-income-countries.pdf> (last visited 22 March 2017).

    12. Ibid.

    13. Neither the report on Action 15 of the BEPS Action Plan nor the Public Discussion draft mention the allocation of taxing rights. See OECD, Developing a Multilateral Instrument to Modify Bilateral Tax Treaties, Action 15 - 2015 Final Report (2015); see <http://dx.doi.org/10.1787/ 9789264241688-en> (last visited 22 March 2017) and OECD, Public Discussion Draft BEPS Action 15: Development of a Multilateral Instrument to Implement the Tax Treaty Related BEPS Measures (2016); see <www.oecd.org/tax/treaties/BEPS-Discussion-draft-MultilateralInstrument.pdf> (last visited 22 March 2017).

  • Metrics
    No metrics available
Share - Bookmark