• Service: Tax, Topics, Base Erosion and Profit Shifting
  • Type: Regulatory update
  • Date: 8/08/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Grant Wardell-Johnson

Grant Wardell-Johnson
Leader, Australian Tax Centre

+61 2 9335 7128

BEPS and the developing world – the Brazilian perspective 

by Grant Wardell-Johnson, Australian Tax Centre

Last night, I was privileged to attend a seminar with Professor Flavio Rubinstein, who shared the view from Brazil on the Base Erosion and Profit Shifting (BEPS) debate, and the importance of integrating perspectives from emerging economies if an effective response to BEPS is to be achieved. 

As Professor Rubinstein pointed out, developing countries are much more reliant on corporate income taxes than more developed economies, and therefore the impact of BEPS is especially relevant. Earlier this week, the Organisation for Economic Co-operation and Development (OECD) released a report on the impact of base erosion and profit shifting (BEPS) on low income countries.


Professor Rubinstein raised a number of the challenges for developing countries in implementing the OECD’s proposed measures to address BEPS. They may lack the necessary legislative measures needed to counter BEPS, and this can be exacerbated by the need for political buy-in as a prerequisite to making the legislative changes and resource commitments required. Developing countries often favour domestic tax incentives for development that may run counter to the international BEPS agenda. Additionally, accessing the relevant information is often especially difficult for developing countries. It can be challenging for developing countries to develop the technical capacity to engage in the process of addressing BEPS.

The specific concerns of Brazil, Professor Rubinstein’s area of particular expertise, are telling.  Those concerns include:

  • the administrative burden and compliance costs associated with BEPS
  • taxpayers rights in tax information exchange procedures
  • the role of 'contributions' (de facto taxes) in corporate taxation and withholding at source

Brazil has a rigid constitutional tax framework and time-consuming legislative procedures for reforms, which makes progressing the BEPS agenda difficult.


Ultimately Professor Rubinstein queried whether a perfectly coordinated, supra-national action on BEPS is really attainable, especially given that the proposed timetable is so short. However, international taxation is now in the spotlight and, as Professor Rubinstein emphasises, that can only be a good thing.


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