VietNamNet Bridge - APEC economies are looking for solutions to tax evasion.Recently, most of the countries in the world have made changes in their tax policy in response to globalization and the challenges of the digital economy.

Recently, most of the countries in the world have made changes in their tax policies in response to globalization and the challenges of the digital economy.

Base erosion and profit sharing (BEPS) is a major challenge for governments, especially developing countries. 

BEPS is understood to be "tax evasion/tax avoidance" of taxpayers. As tax expense accounts for a significant proportion ofbusiness profits of enterprises, to minimize costs, many businesses have taken advantage of the "gap" and the shortcomings in tax policy in countries where they conduct production and business activities to transfer profits to the countries/territories where the tax rates are low or at zero percent.

The Organization for Economic Co-operation and Development (OECD) statistics show that inner-trade transaction of multinational corporations account for more than 30% of global trade, thus tax evasion/tax avoidance risks are very high. In particular, the state budget deficit from corporate income tax (CIT) is about 4% to 10% of global corporate income tax revenue, which is between $100 billion and $240 billion a year. The cause of this situation is BEPS.

This has significant impact on the business environment and undermines the transparency of the tax system, leading to unequal competition in taxation between countries and increases the risk of compliance with tax laws by taxpayers. 

Preventing BEPS by unilateral measures of each country is not feasible while the current bilateral measures are losing their effectiveness and efficiency as the number of multinational enterprises increase, with big, complex transactions. 

Many countries have developed new standards to safeguard tax bases and budget revenues, while also enhancing international cooperation in the implementation of anti-BEPS solutions.

However, this practice requires comprehensive solutions based on multilateral cooperation. And this is one of the important topics discussed at APEC 2017. 

"BEPS - Financial Cooperation Initiative of APEC 2017"

In the APEC Finance Ministerial Progress 2017 chaired by Vietnam, many forums and seminars on BEPS were scheduled. BEPS is one of the "APEC Financial Cooperation Initiatives 2017", selected as one of the topics of the APEC Ministerial Finance Meeting in 2017, chaired by Vietnam.

BEPS in APEC was held in Nha Trang earlier this year by Vietnam, attracting nearly 100 participants, including international financial officials, tax experts of APEC economies, and experts of the World Bank (WB) and OECD. Issues of concern were the minimum standards for BEPS prevention in APEC.

International cooperation on taxation, with focus on BEPS, is one of the four priorities of the APEC financial agenda, which is warmly supported by member economies as well as international financial institutions. 

According to Pascal Saint-Amans, director of the Center for Policy and Tax Administration of the OECD, the promotion of this initiative (BEPS) in APEC is very positive for cooperation. "Vietnam has put tax issues at the top of the APEC agenda. This is good because this is precisely what countries in the world are doing, especially G20 nations. This will put APEC on a level playing field compared to other countries," Pascal said in an interview with the VNA.

Commenting on Vietnam's contribution to the implementation of this initiative, Mr. Pascal said that the promotion of this initiative (BEPS) in APEC was very positive for cooperation. In meetings of APEC, OECD and World Bank have worked with all APEC economies to help the tax administration develop laws; assist the parliaments on this issue; and also help countries protect their tax base when joining the rest of the world.

Hoang Long