The Resource Tax holidays in a BEPS-perspective

Tax holidays in a BEPS-perspective

Tax holidays in a BEPS-perspective
Tax holidays in a BEPS-perspective
  • eng
  • eng
The OECD BEPS project suggests that CFC rules should be strengthened as one of several actions to end double non-taxation and curb tax base erosion and profit shifting. While the application of CFC rules to passive income of foreign companies established in classical tax havens generally would be regarded as justified, this is not the case in our view when a company carrying out genuine economic business activities benefits from low or no taxation for a certain period of time under a tax holiday offered by a developing country. CFC taxation can be useful in curtailing profit shifting out of industrialized countries, however imposing CFC taxation on developing countries' tax holiday incentives would result in the opposite, i.e., a shift of tax revenue from the developing country to the industrialized country's treasury. In preparing the final recommendations regarding the strengthening of CFC rules, OECD should consider the special concerns of developing countries. The authors' view is that non-taxation of tax holiday income should be acceptable as long as the exempted income is generated by genuine economic business activities in the host country and in line with the intended purpose of the tax holiday. Profit shifting arrangements segregating taxable income from the activities that generate it should, on the other hand, be subject to CFC taxation
Citation source
In: Intertax. - Alphen aan den Rijn. - Vol. 43 (2015),
  • Mæhlum Bjerkestuen, H
  • Wille, H.G
Geographic coverage
Language note
  • OECD
  • BEPS
  • tax holiday
  • tax haven
  • CFC

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