TIRANA, August 13
Albania joined a group of countries and jurisdictions that are working on the application of measures that tackle international tax rules and transfer pricing issues known as the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The announcement was made last weeks by the Organization for Economic Cooperation and Development (OECD).
The body led by OECD numbers 134 countries and jurisdictions.
The Inclusive Framework aims at ensuring that the BEPS minimum standards are implanted worldwide. At the same time, the framework reduces opportunities for multinational corporates to commit tax evasion to improve cross-border tax dispute resolutions.
What is the problem?
According to OECD, BEPS is about 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 or to erode tax bases through deductible payments such as interest or royalties. Some of the schemes applied can be illegal, but most are legal.
“This 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. Moreover, when taxpayers see multinational corporations legally avoiding income tax, it undermines voluntary compliance by all taxpayers,” OECD explains.
Moreover, it highlights that BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises.
Source/Photo Credit: OECD