This presentation aims to describe the issue around the international tax standards which are not adapted to the ongoing changes in the economy, creating loopholes and opportunities for base erosion and profit shifting. Such issue is currently being tackled and is taking place in a context where the OECD established the BEPS action plan. This work is based around the following research question: Is the BEPS initiative an appropriate approach to harmonize the international tax system and consequently reduce base erosion and profit shifting? Director: Professor Jean-Pierre De Laet Assessor and jury president: Professor Pascal Minne

1. Addressing International Corporate
Tax Evasion: An Analysis of the
OECD Action Plan
1er Septembre 2017
Florian Marchal
Directeur : Professeur Jean-Pierre De Laet
Assesseur et Président de Jury: Professeur Pascal Minne

2. 2
Agenda
1. Introduction
2. Methodology
3. Theoretical framework
4. Analysis of the results
5. Conclusion
6. Appendix
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan

3. 3
Introduction Conclusion
Florian Marchal
Student in Business Engineering
(Audit & Control)
Risk Assurance Consultant (PwC)
Why corporate tax?Who ?
• Interest for Corporate Tax since BA2
• Internship in Corporate Tax (PwC)
• Learn and understand the ongoing changes
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
Theme and research question
Issue : International tax standards are not adapted to the ongoing changes in the economy creating loopholes and
opportunities for base erosion and profit shifting (Ex: Verizon sheltered 2/3 of its U.S. profits)1
Context: BEPS action plan established by the OECD to tackle such issue
Is the BEPS initiative an appropriate approach to harmonize the international
tax system and consequently reduce base erosion and profit shifting ?
Analysis of the
results
Theoretical
framework
Methodology Appendix

4. This combination of sources has enabled to develop a comprehensive analysis
4
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
InterviewsResearch literature Critical analysis
Articles & empirical evidences
Websites
• OECD
• Tax Justice
OECD Reports
Slide shows
Professors at SBS-EM
Bruno Colmant
Head of Macro Research –
Executive Board member at
Degroof Petercam
Frédéric De Coninck
Head of IP valorization and
valuation team at Gevers
External
• Interviews
• Acquaintances
• Videos
• Advices from PwC
employee
• PwC Webinar – Changing
in the tax landscape
(27/04/2016)
Internal
• Own thoughts
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix

5. 5
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
“Tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift
profits to low or no tax locations where there is little or no economic activity”
What ?
Action plan composed of 15 actions2 that aims at restoring trust
in national and international tax systems through coherence,
substance and transparency.
How ?
By favoring consolidated and uniform international tax rules.
Who ?
Inclusive framework allowing non-G20 and non-OECD to
commit to a minimum standard (Action 5, 6, 13 & 14)
For more details on the timeline of the BEPS project, refer to point 3 of the appendix.
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix
Focus on transfer pricing of
intangible assets
• Aligning transfer pricing outcomes with value
creation (Action 8-10)
• Countering harmful tax practices more
effectively, taking into account transparency and
substance (Action 5)
• Transfer pricing documentation and Country-by-
Country reporting
(Action 13)

6. 6
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
Key elements to take into consideration in order to reduce base erosion and profit shifting
issues
Adap%ng
interna%onal
laws
Monitoring
of
the
IP
regimes
Greater
transparency
Operate
under
a
common
approach
Moving
from
laws
that
deal
with
interchangeable
physical
goods
towards
laws
that
deal
with
intangible
assets
Reducing
inequali?es
between
na?onal
systems
Providing
tax
authori?es
with
essen?al
informa?on
Moving
from
unilateral
agreements
towards
a
common
agreement
Modifying
the
arm’s
length
principle
Modified
nexus
approach
Country-­‐by-­‐Country
report
Mul?lateral
instrument
Reliance
on
consensus-­‐based
approach
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix
Coordina?on
and
involvement

7. 7
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
Alternative to limit base erosion and profit shifting
Des%na%on-­‐based
cash
flow
taxa%on
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix
Formulary
appor%onment
Europe
(2011)
:
Common
Consolidated
Corporate
Tax
Base
(CCCTB).
What?
CCCTB
offers
mul?na?onal
groups
a
single
set
of
rules
to
calculate
their
taxable
profit.
How?
Allocate
consolidated
worldwide
income
on
the
share
of
worldwide
measurable
factors
such
as
capital,
payrolls
and
sales.
Risk
covered?
Covers
the
risk
of
profit
shiTing
but
not
the
risk
of
base
erosion,
since
companies
can
always
relocate
ac?vi?es.
What?
Levying
tax
on
mul?na?onals’
mobile
ac?vi?es
by
reference
to
immobile
factors
such
as
the
final
consumer.
How?
Implying
a
tax
on
imports
and
a
refund
of
tax
on
export4.
Risk
covered?
Covers
the
risk
of
profit
shiTing
and
also
covers
the
risk
of
base
erosion.
=>
Overcomes
the
issues
with
manipula?on
of
transfer
prices.

8. 8
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix

9. 9
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
References
1.
McIntyre
B.
(2016),
GE
and
Verizon’s
claims
about
their
taxes
don’t
stand
up,
Tax
Jus?ce
Blog
2.
OECD
(2015),
Explanatory
Statement,
2015
Final
Reports,
OECD
Publishing.
Ac?on
1
is
focusing
on
addressing
the
tax
challenges
of
the
digital
economy.
Ac?on
9:
Assure
that
transfer
pricing
outcomes
are
in
line
with
value
crea?on
with
regard
to
risks
and
capital.
Ac?on
2:
Neutralize
the
effects
of
hybrid
mismatch
arrangements.
Ac?on
10:
Assure
that
transfer
pricing
outcomes
are
in
line
with
value
crea?on
with
regard
to
other
high-­‐risk
transac?ons.
Ac?on
3:
Strengthen
controlled
foreign
companies
(CFC)
rules.
Ac?on
11:
Establish
methodologies
to
collect
and
analyze
data
on
BEPS
and
the
ac?ons
to
address
it.
Ac?on
4:
Limit
base
erosion
via
interest
deduc?ons
and
other
financial
payments.
Ac?on
12:
Require
taxpayers
to
disclose
their
aggressive
tax
planning
arrangements.
Ac?on
5:
Counter
harmful
tax
prac?ces
more
effec?vely,
taking
into
account
transparency
and
substance.
Ac?on
13:
Re-­‐examine
transfer
pricing
documenta?on
and
ins?tute
country-­‐by-­‐country
repor?ng.
Ac?on
6:
Prevent
tax
treaty
abuse.
Ac?on
14:
Make
dispute
resolu?on
mechanisms
more
effec?ve.
Ac?on
7:
Prevent
the
ar?ficial
avoidance
of
permanent
establishment
status.
Ac?on
15
is
focusing
on
the
development
of
a
mul?lateral
instrument.
Ac?on
8:
Assure
that
transfer
pricing
outcomes
are
in
line
with
value
crea?on
with
regard
to
intangibles.
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix

10. 10
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
2012
2013
2014
2015
2016
2017
July
September
October
3. BEPS timeline
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix

11. 11
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
4. Current tax system – Transfer Pricing
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix

12. 12
Addressing International Corporate Tax Evasion: An Analysis of the OECD Action Plan
4. Destination-based cash flow tax system – Transfer Pricing
Introduction Conclusion
Analysis of the
results
Theoretical
framework
Methodology Appendix