Base Erosion and Profit Shifting (BEPS)
Base Erosion and Profit Shifting (BEPS) refers to tax avoidance strategies used by multinational companies to shift profits from higher-tax jurisdictions to lower-tax ones, reducing their overall tax burden. This can lead to significant losses in tax revenues for countries where these companies operate. The OECD developed BEPS measures to address these issues, promoting transparency and fairness in taxation. These measures aim to ensure that profits are taxed where economic activities occur and value is created, helping to create a more equitable tax system on a global scale.
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Base Erosion and Profit Shifting (BEPS) refers to strategies used by multinational companies to minimize their tax obligations by shifting profits from high-tax to low-tax jurisdictions. This often involves exploiting gaps and mismatches in tax rules between countries, allowing profits to be reported where tax rates are lower. As a result, countries can lose significant tax revenue, affecting public services and economic stability. To combat BEPS, governments and organizations like the OECD are working together to create guidelines and reforms that promote fair taxation and greater transparency in corporate financial practices.