1/8/2024 0 Comments Slice it stage 12![]() emerging economies), the dependence on aid, and the lack of a modernised tax administration, among others. However, other classifications of countries may exist in scholarship taking into account the economic GDP ( e.g. This has also been the approach of the OECD when addressing Low Income Countries in its 2014 report. This classification is useful for the purposes of this article, which is to differentiate between OECD and G20 vs. 7 x This article uses the distinction between developed and developing countries to distinguish between countries members of the OECD or G20 (developed countries) and other countries (developing countries). This article focuses on the developing countries that are for the purpose of this article defined as non-OECD, non-G20 countries and are therefore not represented in the BEPS 44 group. BRICS stands for Brazil, Russia, India, China and South Africa. 6 x The BRICS countries are regarded as emerging economies and even though these countries are non-OECD countries, they have a role in decision making by being members of the G20 and by participating on equal footing in the BEPS 44 group. The content of the BEPS Actions was decided and approved by the BEPS 44 group, which includes OECD, OECD accession countries and G20 countries. Therefore, the OECD developed fifteen Actions including among others, actions dealing with hybrid mismatches, limitation of interest deductions, actions recommending the introduction of CFC rules, rules to prevent the artificial avoidance of PE status, eliminating harmful tax regimes, dealing with tax treaty abuse and with transfer pricing, the disclosure of aggressive tax planning arrangements, and improvement of the mutual agreement procedure. The OECD stated that all parties, governments and individual taxpayers are harmed including also business since ‘fair competition is harmed by the distortions induced by BEPS’. Therefore, presumably the OECD refers to the type of tax planning that results in BEPS. 4 x The European Commission Recommendation of 6 December 2012 on Aggressive Tax Planning C (2012)8806 Final, at 2. According to the European Commission, aggressive tax planning ‘exploits the differences in tax systems by taking advantage of the technicalities of a tax system or of mismatches between two or more tax systems for the purpose of reducing tax liability’. The OECD does not provide for a definition of aggressive tax planning, but it does provide a definition of Base Erosion Profit Shifting: ‘Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps in the architecture of the international tax system to artificially shift profits to places where there is little or no economic activity or taxation.’ This definition is more or less similar to what European Commission perceives as aggressive tax planning. 3 x OECD, Action Plan on Base Erosion and Profit Shifting (2013), at 8 see (last visited 22 March 2017). Aggressive tax planning has ‘led to a tense situation in which citizens have become more sensitive to tax fairness issues’. OECD, Addressing the Tax Challenges of the Digital Economy, Action 1 – 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project (2015), at 17 see (last visited 22 March 2017). As to the OECD, ‘this principle implies that the potential for tax evasion and avoidance should be minimised while keeping counteracting measures proportionate to the risks involved’. Fairness is one of the tax principles the OECD formulated in its Ottawa Tax Framework, as revised in 2005 by the OECD Technical Advisory Committee (TAC). Moreover, when taxpayers see multinational corporations legally avoiding income tax, it undermines voluntary compliance by all taxpayers.’ 2 x See ‘About BEPS and the inclusive framework’, (last visited 22 March 2017). According to the OECD, aggressive tax planning ‘undermines the fairness and integrity of tax systems because businesses that operate across borders can use BEPS to gain a competitive advantage over enterprises that operate at a domestic level. In its Action Plan, the OECD calls for ‘fundamental changes to the current mechanisms and the adoption of new consensus-based approaches, including anti-abuse provisions, designed to prevent and counter base erosion and profit shifting’. endorsed the Base Erosion and Profit Shifting (BEPS) Action Plan. Petersburg including the Tax Annex to G20 leaders declaration see (last visited 22 March 2017). Petersburg 1 x G20 Leaders Declaration meeting in St. 1 Introduction 1.1 OECD’s BEPS Action Plan, Low Income Country Report, Multilateral Instrument and Inclusive Framework 1.1.1 BEPS Action Plan.
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