Aiming to achieve a coordinated implementation of international taxation principles, the Organisation for Economic Co-operation and Development (OECD) produced a detailed report in September 2014 concerning Base Erosion and Profit Shifting (BEPS). Based on this Action Plan on BEPS, OECD provides specific measures and actions, which can be used by governments as instruments on covering the gaps in existing international tax rules and preventing the development of tax avoidance schemes by multinational corporations structure businesses taking advantage of different corporate tax rates.
The rapid development on the field of technology and communication and the economic globalization have repealed in practice the distances and the barriers between the nations and has developed the suitable environment for the multinational corporation structure firms to operate their businesses. Multinational enterprises ar...
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...ues, i.e. USD 100 to 240 billion annually.
Investigating the roots of the corporation tax avoidance problem can be identified on the approach adopted by government, which maintains a “separate entity approach” concerning multinational companies, treating them as parts of the company operating on its tax jurisdiction and not as a whole entity included subsidiaries (“unitary approach”). Under the “separate entity approach” and the continuing efforts for the prevention of double taxation, more than 2.500 tax agreements between nations have been signed, creating the suitable background for under- or non-taxation and development of tax competition. Based on the competition tax, governments, having as main goal to enhance inflow of income and prevent of the exodus of it to other countries, minimize the imposed corporate taxes in order to acquire a comparative advantage.
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