Limiting Base Erosion

S. 1021. Introduction

As a result of the BEPS (Base Erosion and Profit shifting) project, we are witnessing a general rethinking of international taxation practices and policies. In general terms, the recommendations of the BEPS Project led by the Organisation for Economic Cooperation and Development (OECD) are essentially aimed at closing the gaps, loopholes and mismatches in international taxation for companies which purposely avoid taxation or reduce their tax burden in their home country by moving their operations in low tax rate countries or their intangible assets to lower tax jurisdictions.

In this new tax landscape, we are also witnessing the adoption by countries of new coordinated measures in order to tackle abusive tax practices.

The general BEPS framework was issued in February 2013. The BEPS Report explains the studies and the statistical data demonstrating how base erosion and profit shifting constitute “a serious risk to tax revenues, tax sovereignty and tax fairness for OECD member countries and non-members alike” and that “the main purposes of that plan would be to provide countries with instruments, domestic and international, aiming at better aligning rights to tax with r...