Q: The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news in the context of
a) mining operation by multinational companies in resource-rich but backward areas
b) curbing of the tax evasion by multinational companies
c) exploitation of genetic resources of a country by multinational companies
d) lack of consideration of environmental costs in the planning and implementation of developmental projects
The correct answer is Option 2.
Base erosion and profit shifting (BEPS)
- It has to do with tax avoidance tactics used by businesses to artificially transfer earnings to low- or no-tax jurisdictions by taking advantage of gaps and inconsistencies in tax laws. Hence, Option 2 is correct.
- More than 135 nations and jurisdictions work together within the inclusive framework to implement the BEPS measures and reduce BEPS.
- To stop this behaviour, member countries communicate tax information with one another and sign double tax avoidance treaties.
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