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OECD Action Plan on tax avoidance

The Organisation for Economic Cooperation and Development (OECD) has now issued its Action Plan on Base Erosion and Profit Shifting (the Plan).

The Plan indicates that, in the OECD’s view, there are weaknesses in the current international tax system. In many circumstances existing law and treaties yield the correct result, but without co-ordinated action countries that wish to protect their tax base may resort to unilateral action that could result in double taxation and uncertainty. 

The Plan, therefore, concludes that fundamental, consensus-based changes are needed.

The Plan contains 15 Actions, each of which is linked to specific outputs that are to be completed in 2014 and 2015, namely:-

  • Address the challenges of the digital economy.
  • Neutralize the effects of hybrid mismatch arrangements.
  • Strengthen CFC rules.
  • Limit base erosion via interest deductions and other financial payments.
  • Counter harmful tax practices more effectively, taking into account transparency and substance.
  • Prevent treaty abuse.
  • Prevent the artificial avoidance of permanent establishment status.
  • Assure that transfer pricing outcomes are in line with value creation.
     

 

 

Date: 9th August, 2013
Author: Cathy Corns

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