Base Erosion Profit Shifting – Introduction

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....hat are distant from the physical location of their customers. These developments have been accompanied by the increasing sophistication of tax planners in identifying and exploiting the legal arbitrage opportunities and the boundaries of acceptable tax planning, thus, encouraging MNEs to minimise their tax burden by resorting to aggressive tax planning. According to an estimate by IMF, tax avoidance through profit shifting is estimated to be around $400 billion for OECD countries and $200 billion for lower-income countries. Recently, a study by the Tax Justice Network estimated that India is losing around INR 70,000 crores on account of international tax abuse. Such aggressive tax planning has its own adverse effect on economy. Thus, BE....

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....ransparency and improved data - Pre-requisites to evaluate the impact and magnitude of BEPS. * Taxpayers to report their aggressive tax planning arrangements and rules about transfer pricing documentation. * Making dispute resolution mechanisms more effective. Income Tax Department designates Income tax Authority before whom particulars of parent entity and alternate reporting entity to file Country-by- Country Report would be notified. [Press Releases] * In order to ensure that a multinational enterprise would report its profit correctly where it is earned, the Organisation for Economic Cooperation and Development (OECD) had developed an Action Plan called "Base Erosion and Profit Shifting (BEPS) Action Plan 13". Under BEPS Action P....