Assignment Module 3 - BEPS project Action 4 (0)

BEPS project Action 4: Interest deductions and other financial payments
Maris Leemets
10.08. 2016
Peer Assignment in Module 3
The OECD with its Base Erosion and Profit Shifting (BEPS) project is working towards proposing politically feasible and multilaterally acceptable ways to minimize the corporate tax base erosion and profit shifting activities since 2013. Out of its 15 main lines of work under BEPS project (called Actions) I will concentrate on Action 4 which aims at proposing new rules for preventing the manipulation of interest expense related tax deductions of corporates. The underlying problem is that multinational groups can easily create and relocate debt in their group according to the most preferential tax treatment available which in some cases results in no or even negative corporate tax payments from those companies .
For BEPS project to be transparent and inclusive, a broad- based public involvement has been carried out by the OECD. The discussion draft to prepare the final report and received comments to the discussion draft were both published, in 2014 and early 2015, respectively. On October 5th, 2015 the Final Report on Limiting Base Erosion Involving Interest Deductions and Other Financial Payments was presented analyzing several best practices and recommending new