Home Taxes GST What Is BEPS (Base Erosion & Profit Shifting) Concept In India ?

What Is BEPS (Base Erosion & Profit Shifting) Concept In India ?

September 13, 2018

What Is BEPS Tax – OECD Concept In India ? – Action Plan, Transfer Pricing & Country by Country Reporting

BEPS Is – Base Erosion & Profit Shitfing. You Know Transfer Pricing in Income Tax is a complex aspect, much of which is devised to ensure that the pricing in the transaction is kept at ‘Arm’s Length Price’ even with related parties to ensure fair taxation.

Similarly, Base erosion and profit shifting (BEPS) is a global problem which requires global solutions. BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).

BEPS project aims to fulfil G20-OECD’s 15 points action plan on multifarious aspects of international tax policy by December 2015. As per Recent Update, the Final BEPS Package is Set on 5th October, 2015 and Live Webcast can be watched on Tweet Link Below.

Deliverables in BEPS

2014 Deliverables (Released in September 2014)

Action 1: Address the Tax Challenges of the Digital Economy
Action 2: Neutralise the Effects of Hybrid Mismatch Arrangements
Action 5: Counter Harmful Tax Practices More Effectively, Taking Into Account Transparency and Substance
Action 6: Prevent Treaty Abuse
Action 8: Assure that Transfer Pricing Outcomes are in Line with Value Creation/Intangibles
Action 13: Re-examine Transfer Pricing Documentation
Action 15: Develop a Multilateral Instrument

2015 Deliverables

Action 3: Strengthen CFC Rules
Action 4: Limit Base Erosion via Interest Deductions and Other Financial Payments
Action 7: Prevent the Artificial Avoidance of PE Status
Action 9: Assure that Transfer Pricing Outcomes are in Line with Value Creation/Risks and Capital
Action 10: Assure that Transfer Pricing Outcomes are in Line with Value Creation/Other High-Risk Transactions
Action 11: Establish Methodologies to Collect and Analyse Data on BEPS and the Actions to Address It
Action 12: Require Taxpayers to Disclose their Aggressive Tax Planning Arrangements
Action 14: Make Dispute Resolution Mechanisms More Effective

Once the BEPS Project Package Is Fully Received by G20 Finance Ministers, it would be quite a task for the Government to Amend the Laws and align the same with such Conclusions as set forth in the Package.

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