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By Hance Law Avocats
Luxembourg, Luxembourg

How can BEPS impact my organization?

The Organization for Economic Co-operation and Development (OECD) has the mission to promote policies that will improve the economic and social well-being of people around the world. The organization has some projects going on, and one of them which we will focus on, is “Base Erosion and Profit Shifting”, best known for BEPS. The initiative refers to tax avoidance strategies that identifies gaps in tax rules that could shift profits to low or zero tax locations. Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS initiative. This means that this initiative pursue to reduce or close gaps in international taxations for companies that allegedly reduce or avoid taxation in their home country, by moving operations or implementing different strategies depending on each case.

The OECD has issued 15 action items to express the main areas where companies have been most aggressively accomplishing this shift of profit, regarding digital economy, transfer pricing documentation, etc. This 15 action items were developed in the context of the OECD/G20 BEPS Project, set out by team governments with domestic and international instruments to address tax avoidance, ensuring that profits are taxed where economic activities generating the profits are performed and where value is created.

On October 5, 2015, the organization issued the final recommendations on the BEPS initiative, and since then they have been designing and putting in place inclusive framework for monitoring BEPS, supported by the implementation of measures.

In order to ensure consistent implementation and certainty for both tax administration and taxpayers, the OECD has released further guidance on the implementation country-by-country reporting.

BEPS initiative has been a significant shift in the overall dynamics of international tax planning and compliance, and companies have been considering this changes by implementing different strategies regarding this area of their business.

Please don't hesitate to contact us for further information or detailed explanation, Hance Law Avocats, +352 274 404.