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Pascal Saint-Amans and Grace Perez-Navarro comment on the impact the work on the BEPS Action Plan has made over the past two years and thank the staff of the Centre for Tax Policy and Administration (CTPA) at the OECD for their efforts.

In its push towards positioning India as an attractive investment destination and to improve the ease of doing business in the country, the Government has announced further tax initiatives.

The 2013 Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan) identified treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Jacques Sasseville and Edward Barret look at the work done to counter the unintended uses of tax treaties in an international context.

The lack of timely, comprehensive and relevant information on aggressive tax planning strategies is one of the main challenges faced by tax authorities worldwide. Early access to such information provides the opportunity to quickly respond to tax risks through informed risk assessment, audits, or changes to legislation or regulations. Youngnoh Kim explains how mandatory disclosure rules will facilitate this.

Many of the BEPS actions have resulted in agreed changes to the OECD Model Tax Convention. These changes must be implemented swiftly, efficiently and consistently to ensure that treaty-related BEPS issues can be addressed. The ordinary way for implementing such treaty changes would be for each country to renegotiate its existing bilateral tax treaties, which would take decades to complete given the size of the existing network of more than 3,000 tax treaties globally. The project therefore included a commitment to develop a multilateral instrument to sidestep this problem. Jesse Eggert and Evelyn Lio explain.

The 2013 BEPS Action Plan stressed that improving the availability and analysis of data on BEPS is critical, including to monitor the implementation of the Action Plan. Tom Neubig and Bob Cline explain how the Action 11 Final Report, Measuring and Monitoring BEPS, addresses this challenge.

Transfer pricing was pointed to as a root cause of the erosion of countries’ tax bases even before the BEPS Project materialised. Andrew Hickman, Melinda Brown and Mayra Lucas explore the transfer pricing-specific aspects of the project.

Tax treaties generally provide that the business profits of a non-resident enterprise are taxable in a state only to the extent that the non-resident enterprise has a permanent establishment (PE) in that state to which such profits are attributable. The PE definition included in tax treaties thus provides a crucial threshold to determine whether a non-resident enterprise must pay income tax on its business income in another state, explain Jacques Sasseville and Edward Barret.

The effective implementation of the arm’s-length principle is closely linked to the availability of information. In transfer pricing, the asymmetry of information between taxpayers and tax administrations can be acute, potentially opening opportunities for BEPS. For this reason, the BEPS Action Plan stressed the need to enhance transparency in general, and for transfer pricing purposes in particular. Andrew Hickman, Samia Abdelghani and Paul Hondius explain these enhancements in the context of Action 13.

The idea of substantial activity is central to the work on harmful tax practices, as Kate Ramm explains.