In a step forward to restrict the use of tax havens, the final package of measures proposed by the Organisation for Economic Cooperation and Development (OECD) as a part of its base erosion and profit shifting (Beps) project will be presented to the G20 leaders in Turkey.
In a bid to improve transparency, close loopholes and restrict the use of tax havens, the new BEPS rules will make it harder for companies such as Starbucks, Amazon and Google to concentrate their profits in low-tax countries and tax havens. This shift promises to raise up to USD 250 billion a year in extra tax revenue, according to the OECD.
The push for BEPS rules gained traction after the culmination of an international project that was launched two years ago by G20 governments in response to public anger over corporate tax avoidance. Subsequent G20 summits have witnessed massive protests outside the venues. To bring these BEPS rules into effect, around 90 countries worldwide had been working together to come up with a multilateral instrument that can integrate the BEPS measures into the bilateral treaties already in place.
After the delivery of the BEPS measures to G20 leaders during their annual summit in Turkey, the focus will then be on designing and putting in place an inclusive framework for monitoring BEPS and supporting implementation of the measures. All interested countries have been invited to participate on an equal footing.
The latest BEPS measures includes new minimum standards on a country-by-country reporting, which will give tax administrations a global picture of the operations of multinational enterprises. Such a move has been made for the first time which is likely to rattle the corporates.
With an aim to change international tax rules, the comprehensive set of reforms won strong support for its proposed solutions to close loopholes that allow corporate profits to “disappear” for tax reasons.
The summit will work towards implementing of these reforms successfully.
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