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Base Erosion Profit Shifting

Posted on : 27 Dec 2019

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  • The Union Cabinet has approved the ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
  • The Multilateral Convention is an outcome of the OECD / G20 Project to tackle Base Erosion and Profit Shifting (the “BEPS Project”)
  • The Convention will modify India’s treaties in order to curb revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out and where value is created.
  • BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no tax being paid.
  • The convention enables all signatories to meet treaty-related minimum standards that were agreed as part of the BEPS package.

Article Related Questions

  1. Recently, Union Cabinet has approved the ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS). In this context, consider the following statements
    1.The Multilateral Convention is an outcome of the OECD / G20 Project.
    2.The convention will significantly modify India’s Double Taxation Avoidance Agreement from 2020-21 onwards.
    Which of the above statements is/are correct?

  2. 1.1 only

    2.2 only

    3.Both 1 and 2

    4.Neither 1 nor 2

    Right Ans : Both 1 and 2

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