The future of tax Base Erosion and Profit Shifting Action Plan The OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan reflects its view of weaknesses in the international tax system. For business leaders, the project is an opportunity for proactive engagement with tax authorities. It is also a call to action to review tax policies and ensure systems and processes are in place to address additional transparency requirements. Page 18 Consider transfer pricing for intangibles Address the tax challenges of the digital economy Consider transfer pricing for risks and capital Industry-specific Neutralize the effects of hybrid mismatch arrangements Strengthen controlled foreign corporation (CFC) rules Counter harmful tax practices more effectively, taking into account transparency and substance Consider transfer pricing for other high-risk transactions Transfer pricing BEPS Action Plan Making dispute resolution mechanisms more effective Technical response Limit base erosion via interest deductions and other financial payments Prevent the artificial avoidance of permanent establishment status Execution Prevent treaty abuse Development of a multilateral instrument for amending bilateral tax treaties Transparency Re-examine transfer pricing documentation Require taxpayers to disclose their aggressive tax planning arrangements Credit: EY Establish methodologies to collect and analyze data on BEPS and actions addressing it EY – Tax Insights for business leaders №11 7