China Tax Alert - Issue 18, August 2013
On July 19, 2013, the Organisation for Economic Co-operation and Development (OECD) publicly released its “Action Plan for multilateral cooperation to address tax Base Erosion and Profit Shifting (BEPS). The BEPS action plan was presented to the G20 Finance Ministers at their meeting in Moscow, and inaugurates a global collaborative effort to modernise the international tax system. The plan describes 15 proposed actions, identifies expected outputs, and establishes the anticipated timeframe.
As an observer in the OECD, China is expected to closely monitor the progress of this OECD initiative, and roll out new regulations corresponding to certain BEPS action items over the coming months. This will have significant international tax and transfer pricing implications for multinational companies (MNCs) operating in China. MNCs are encouraged to immediately conduct tax health-checks to identify potential weaknesses, and take measures to rectify these areas.