Tuesday, 21 April 2015

OECD identifies Base Erosion and Profit Shifting (BEPS) indicators but more work needed to quantify extent of BEPS

Multinational enterprises (MNEs) will be interested in the results of the work done by economists and others under Action 11 of the Base Erosion and Profit Shifting (BEPS) Action Plan.

There are some firm conclusions about indicators of BEPS in the discussion draft published on 16 April under Action 11. There is also recognition that assessing the extent of BEPS is 'severely constrained' and no attempt is made in the draft to ascertain an overall figure for total BEPS. Two approaches are put forward as alternative ways of seeking to measure BEPS:

  • extrapolating from studies assessing the impact of tax rate differentials on the movement of profit from one location to another, and
  • adding the amounts identified for each separate BEPS channel (per the Action Plan) with an adjustment for interactions between them.

Existing data sources are considered but questions remain as to whether there are other sources and whether the data will be adequate to perform reliable analyses.

Source & more info: PwC