The OECD are working towards a co-ordinated international approach to combat tax avoidance by multinational enterprises worldwide i.e. Google, Apple, Starbucks. 

The Base Erosion and Profit Shifting Project (BEPS) aims to provide governments with clear solutions for fighting corporate tax planning that exploit gaps and loopholes to shift profits to locations where they are subject to more favourable tax treatment. 

Once agreed all 44 OECD Members, OECD Accession Countries and G20 Countries will adhere to these new rules. 

These will also become best practice for all other countries.  

There are 15 actions (areas) in the BEPS Project of which 7 have been completed to date. 

One of the main areas that will effect Ireland will be around transfer pricing where multinationals base the technical knowhow of a product here and charge a licence fee to foreign subsidiaries for its use. 

Generally profits accrue to the Irish company but by using a second Irish company (double Irish) these profits can be transferred abroad to say Bermuda and are taxed at 0%. 

The OECD wants to have these profits taxed at least in Ireland or in the original country where the product is consumed.

Brian Dignam is Director in OSK. Contact OSK for all your tax and accounting services on 01 439 4200.

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