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

Under the OECD/G20 BEPS Project, the set of 15 Action Plans includes some that are classed as 'minimum standards' which all participating members of the Inclusive Framework are expected to implement. Which one of the following Actions is a minimum standard?

Action 13, dealing with transfer pricing documentation and Country-by-Country Reporting, is a BEPS minimum standard. The other minimum standards are Actions 5, 6 and 14. Actions 3, 4 and 7 are only recommended approaches or best practices, which countries may adopt at their discretion.

  1. AAction 7 – Preventing artificial avoidance of permanent establishment status
  2. BAction 13 – Transfer pricing documentation and Country-by-Country ReportingCorrect
  3. CAction 3 – Strengthening Controlled Foreign Company rules
  4. DAction 4 – Limiting base erosion through interest deductions

Explanation

The four BEPS minimum standards are Action 5 (harmful tax practices), Action 6 (treaty abuse), Action 13 (TP documentation and CbCR) and Action 14 (dispute resolution). Action 13 is therefore the only minimum standard listed. Actions 3, 4 and 7 are recommendations or best-practice approaches, so countries are not bound to adopt them in the same way.

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