Question

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

Answer 1

The correct option is B curbing of the tax evasion by multinational companies

Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions, thus "eroding" the "tax-base" of the higher-tax jurisdictions. The Organisation for Economic Co-operation and Development (OECD) define BEPS strategies as "exploiting gaps and mismatches in tax rules"