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CA Final · Direct Tax Laws & International Taxation · Fundamentals of BEPS

A tax consultant is briefing the board of an Indian group on the OECD/G20 BEPS Action Plan of 15 actions. Which of the following is NOT one of the four minimum standards under the BEPS package?

Action 4, on limiting interest deductions, is not a minimum standard. The four minimum standards are Actions 5, 6, 13 and 14. Action 4 is only a recommended common approach, so jurisdictions may adopt it in a flexible way and are not bound to implement it.

  1. AAction 5 on countering harmful tax practices
  2. BAction 4 on limiting base erosion through interest deductionsCorrect
  3. CAction 6 on preventing treaty abuse
  4. DAction 13 on transfer pricing documentation and country-by-country reporting

Explanation

The four minimum standards are Action 5 (harmful tax practices), Action 6 (treaty abuse), Action 13 (transfer pricing documentation and CbC reporting) and Action 14 (dispute resolution). Action 4 on interest deductions is a recommended common approach, so countries are encouraged but not obliged to adopt it. Options A, C and D are all minimum standards.

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