13 Jan Base Erosion and Profit Shifting (BEPS)
Base Erosion and Profit Shifting (BEPS)
Definition:
Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to “shift” profits from higher-tax jurisdictions to lower-tax jurisdictions, thus “eroding” the “tax-base” of the higher-tax jurisdictions.
Source:
Transparency.org; Comments from UNISHKA
Word in Use:
“The statistics for corporate tax payment, shows the debilitating effects of base erosion and profit shifting as well as abuse of an overly generous tax incentive and duty waiver system.” The Sun Nigeria; “Federal Government Promises Tax Evaders Hell”; November 6, 2017.
See Also:
Tax Haven
Comment
The Organization for Economic Co-operation and Development (OCED) defines BEPS strategies as “exploiting gaps and mismatches in tax rules”. In January 2017, OCED estimated that BEPS tools are responsible for tax losses of approximately $100 – $240 billion per year. Most BEPS activity is associated with industries with intellectual property (IP) and Life Sciences. Additionally, most BEPS activity is associated with U.S. multinational corporations. In June 2018, research identified Ireland as the world’s largest BEPS hub.
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