Base Erosion and Profit Shifting

Base Erosion and Profit Shifting (BEPS) occurs when a corporate entity shifts its profits from the original place where real economic activities is carried out to a lower tax jurisdiction solely to avoid paying higher tax rate.

Organization for Economic Co-operation and Development (OECD) recognizes the gaps and differences in the current international tax rules and practices that allow corporate entities to gain such unfair tax advantages. As a result, governments experience a significant decrease in percentage of tax revenue and worst it leads to shrinking in welfare benefit spending by governments on needy household.

Singapore joined inclusive framework for implementing measures against BEPS in June 2016. As a member, Singapore will work with other participating jurisdictions to ensure the consistent implementation of measures under the BEPS Project, and a level playing field across jurisdictions. Following that the four internationally-agreed standards under the BEPS projects were implemented:   

• Countering harmful tax practices.
• Preventing treaty abuse.
• Transfer pricing documentation.
• Enhancing dispute resolution.