Base Erosion Profit Shifting – Introduction

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..... ns that are distant from the physical location of their customers. These developments have been accompanied by the increasing sophistication of tax planners in identifying and exploiting the legal arbitrage opportunities and the boundaries of acceptable tax planning, thus, encouraging MNEs to minimise their tax burden by resorting to aggressive tax planning. According to an estimate by IMF, tax avoidance through profit shifting is estimated to be around $400 billion for OECD countries and $200 billion for lower-income countries. Recently, a study by the Tax Justice Network estimated that India is losing around INR 70,000 crores on account of international tax abuse. Such aggressive tax planning has its own adverse effect on economy. Thus, B .....

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..... evaluate the impact and magnitude of BEPS. Taxpayers to report their aggressive tax planning arrangements and rules about transfer pricing documentation. Making dispute resolution mechanisms more effective. Income Tax Department designates Income tax Authority before whom particulars of parent entity and alternate reporting entity to file Country-by- Country Report would be notified. [ Press Releases ] In order to ensure that a multinational enterprise would report its profit correctly where it is earned, the Organisation for Economic Cooperation and Development (OECD) had developed an Action Plan called Base Erosion and Profit Shifting (BEPS) Action Plan 13 . Under BEPS Action Plan 13, all large multinational enterprises (MNEs) are requir .....

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..... ituent entity is incorporated or organised or established and the country or territory where it is resident; (c) the nature and details of the main business activity or activities of each constituent entity . For the above stated purpose, the Central Board of Direct Taxes(CBDT) had notified Rules 10DA , 10DB and Form Nos. 3CEAA to 3CEAE in Income-tax Rules, 1962 . The Income Tax (2nd Amendment) Rules, 2020 has amended rules 10DA and 10DB and notification no. 03/2020 dated 06.01.2020 has already been issued in this regard. As per the amended rule 10DB(1), the income tax authority for the purpose of section 286 shall be the Joint Commissioner as may be designated by the Director General of Income tax (Risk Assessment). In view of the above am .....

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