Base Erosion and Profit Sharing (BEPS) Action Plan: Changes to the International Tax System

In November 2015, Prime Minister Justin Trudeau and the other G20 leaders endorsed the OECD’s package of measures released as part of the base erosion and profit shifting (BEPS) project. The BEPS project, an ambitious plan undertaken jointly by the OECD and G20 to overhaul the global international tax system, culminated in hundreds of pages of recommendations that, if adopted, could have a significant impact on cross-border trade and the competitiveness of Canadian businesses.

In 2019, the OECD published its Programme of Work [PDF] to Develop a Consensus Solution to the Tax Challenges Arising from the Digitalization of the Economy (Program of Work). This Program of Work intends to lead to a global consensus on revisions to the international tax system in an effort to prevent countries from imposing unilateral measures to tax the income of multinationals (particularly those operating highly digitized businesses). The OECD’s Program of Work contains two principal measures: Pillar One, which would allocate additional taxing rights to market jurisdictions (such as by revising the “permanent establishment” nexus for establishing source country taxing rights and revising the “arm’s length” standard for allocating profits), and Pillar Two, which would introduce a global minimum tax to prevent the shifting of profits to low-tax jurisdictions. This Program of Work was endorsed by Canada and other G20 countries and, if adopted globally, will mark a fundamental overhaul of the entire international tax system and could significantly increase taxes and administrative costs of multinational enterprises.

Lawyers in Osler’s leading Tax Group are experts on the complexities of international taxation and understand the challenges of a rapidly changing global economy. Here they offer timely insight into global tax reforms and the ongoing developments of the OECD/G20 BEPS Action Plan.

As the Action Plan unfolds, Osler will continue to provide updates on the impact of the plan initiatives. Continue to visit this page for useful information.

BEPS Actions Implementation - Canada

Please click on Pillar One or Pillar Two below to access additional information and related resources.

This chart is an overview of the 15 action items, outputs and resources that we have curated to provide you with detailed information for each action item. Click on an action item below to access the information.

Selected Resources

Controlled Foreign Company Rules (CFC Rules)

Summary

Designing Effective Controlled Foreign Company Rulesrecommendations to strengthen rules of CFC’s.

Output

Domestic Law

Selected Resources

Summary

Measuring and Monitoring BEPSMethodologies to collect and analyse data on BEPS and the actions to address it.

Output

Recommendations/TPG

Selected Resources

Background on the BEPS Action Plan

To better understand the background behind the OECD/G20 BEPS Action Plan, we have a few videos that outline the shifts in the international tax system and global reactions to the plan.
 

OECD, G8 and G20 Study − Changes Ahead to the International Tax System

Patrick Marley, Taxation Partner, discusses shifts in the international tax system (July 2013)

 

Richard Tremblay, Taxation Partner, discusses the shift in the international tax system (July 2013)


 

International Reaction to the OECD Action Plan

Patrick Marley, Taxation Partner, comments on International Reaction to the OECD Action Plan (November 2013).

 

Key Contacts

Patrick Marley

Patrick Marley
pmarley@osler.com
tel: 416.862.6583

Matias Milet

Matias Milet
mmilet@osler.com
tel: 416.862.6648

Drew Morier

Drew Morier
dmorier@osler.com
tel: 416.862.5971

Kaitlin Gray

Kaitlin Gray
kgray@osler.com
tel: 403.355.7451

International Tax Planning

Canadian and multinational clients engaged in international transactions rely on Osler to provide timely tax planning and liability management advice.

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Transfer pricing

OECD transfer pricing guideline amendments, the influence of BEPS and interest in tax arbitrage has increased scrutiny of transfer pricing policies and strategies.

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