The Multilateral Convention on Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) has now taken place with 100+ countries having signed the multilateral agreement in order to re-evaluate the current tax treaties. Base Erosion and Profit Shifting (BEPS) concerns tax avoidance schemes that utilise gaps in tax regulations in order to synthetically shift profits to low or no-tax jurisdictions.
The Organisation for Economic Co-operation and Development (OECD) states that the international tax loopholes cost countries approximately USD $240 billion in foregone revenue per annum. The OECD’s BEPS initiative aims to combat the issue of tax avoidance by multinationals and create a more equitable global tax system. This years’ convention drives the core mission of restoring the public’s trust in the transparency of global government’s and now making tax treaties fit for purpose. Tax treaties will now eradicate double taxation without creating favourable circumstances for non-taxation and reduced taxation through tax avoidance or evasion.