The term 'Base Erosion and Profit Shifting' is sometimes seen in the news in the context of
- A.mining operation by multinational companies in resource-rich but backward areas
- B.curbing of the tax evasion by multinational companies
- C.exploitation of genetic resources of a country by multinational companies
- D.lack of consideration of environmental costs in the planning and implementation of developmental projects
Correct answer
Explanation
The correct answer is B, curbing of the tax evasion by multinational companies. Base Erosion and Profit Shifting (BEPS) describes how multinationals shrink their tax base in one country by moving profits to low-tax places.
Companies do this through methods such as transfer pricing between their own subsidiaries, routing royalties and interest to tax havens, and booking digital sales where they pay little tax. The term became widely known through the OECD and G20 BEPS Project, launched in 2013, which produced a 15-point Action Plan in 2015 to close these gaps. India took part actively; its equalisation levy on digital advertising and its rules on country-by-country reporting came out of this work. The later two-pillar plan, including a global minimum corporate tax of 15 percent, grew from the same project.
A is wrong because BEPS concerns taxation, not mining. C is wrong because misuse of genetic resources is called biopiracy. D is wrong because ignoring environmental costs relates to environmental impact assessment, not tax.
Exam tip: BEPS = OECD/G20 project against profit shifting to tax havens.
Practice Questions
View all'SWAYAM', an initiative of the Government of India, aims at
- A.promoting the Self Help Groups in rural areas
- B.providing financial and technical assistance to young start-up entrepreneurs
- C.promoting the education and health of adolescent girls
- D.providing affordable and quality education to the citizens for free
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SWAYAM is India's national platform of free online courses. SWAYAM stands for Study Webs of Active-Learning for Young Aspiring Minds.
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- A.1 and 2 only
- B.3 only
- C.2 and 3 only
- D.1, 2 and 3
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- A.1 only
- B.3 and 4
- C.1 and 2
- D.2 and 4
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- A.Thirteenth Finance Commission
- B.Fifteenth Finance Commission
- C.Fourteenth Finance Commission
- D.Twelfth Finance Commission
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Read the full explanation →Consider the following statements regarding Public Goods and Externalities : 1. Non-rivalry and non-excludability are two characteristics of Public Goods 2. Market can provide the optimal amount of a good in the presence of externalities Which of the statements given above is/are correct ?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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