Dealing with base erosion and profit shifting presupposes that it is known what this is. The concept of value creation claims to provide an answer as to where profits should be taxed and, therefore, when the tax base is being shifted. The OECD introduced value creation as the central benchmark. All of the OECD’s anti-base erosion and profit shifting measures are intended to “ensure that profits are taxed where economic activities take place and value is created”. Consequently, “taxation where value is created” can be regarded as being at the core of the OECD Base Erosion and Profit Shifting (BEPS) initiative.

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