The Virgin Islands played host to the Organisation for Economic Cooperation and Development, as well as representatives from 12 other jurisdictions, on Tuesday at a conference on the “current developments in international taxation and the impact on Caribbean jurisdictions.”
Tuesday’s conference was closed to the public — and a press conference Wednesday didn’t conclude in time for this edition’s press deadline — but a press release from BVI Finance stated that the major topic of discussion was the OECD’s impending new rules on base erosion and profit shifting, otherwise known as BEPS.
According to the OECD, BEPS occurs when multinational corporations engage in accounting gimmicks to lessen their tax bills.
The OECD illustrated this practice in its report on the subject published last year, explaining that a company in one country can make a payment to a related firm in another and receive a tax deduction on the payment from the former country while receiving a tax exemption on the receivable from the latter country.
To curtail this practice, the OECD has recommended that countries sign on to a global regime that would require multinationals to disclose their tax planning strategies — meaning that they would have to report, jurisdiction by jurisdiction, where they earn profits, house their assets, and employ staff.
The goal of these requirements, according to the OECD, is to “align taxing rights with the
relevant value-adding activity” — in other words, to force multinational corporations to pay taxes in the jurisdiction where they’re doing business.
See the Dec. 15, 2016 edition for full coverage.
{fcomment}