ICRICT's new paper: BEPS 2.0. What the OECD BEPS has achieved and what real reform should look like.

In 2012, the G20 called on the Organization for Economic Cooperation and Development (“OECD”) to reform the international corporate tax system through the Base Erosion and Profit Shifting (“BEPS”) initiative and associated processes. In 2015, a package of reforms was unveiled by the OECD. The reform process was only afterwards open to non-G20 countries, including developing economies, within the “Inclusive Framework”.

 BEPS has resulted in helpful solutions for some of the most shocking tax avoidance mechanisms. But it has failed to address the core problem: companies are still allowed to move their profits wherever they want and to take advantage of very low tax jurisdictions.

 The Independent Commission for the Reform of International Corporate Taxation (ICRICT) thinks the OECD BEPS process has achieved what it could, within the constraints of politics driven by big corporations. We are also worried about the way developing countries are prevented from engaging in the shaping of global tax Standards, since the BEPS process was elaborated by developed countries for developed countries.

 We are assessing, in this new paper, what the OECD BEPS process has achieved so far, offering ideas about what real reforms should look like.

 This report is issued less than a week before an important meeting in Paris (January 23) in the OECD offices. For the first time the OECD will be presenting to developing countries, the preambles of what will be the “BEPS 2.0” plan, in other words, a deeper transformation of the tax system, looking at the challenges posed by the digitalization of the economy. It is a unique opportunity for all governments to urge the OECD to move away from the transfer pricing system towards a fairer and more effective system.

 The lack of consensus so far on how to tax digital multinationals has led numerous countries to implement (India, Italy, Spain, and France) or to promise to implement (United Kingdom) taxes based on turnover on a unilateral basis as a stop gap measure to raise revenue.

 You can download the full report here.

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