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Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation

Received: 21 October 2018     Accepted: 6 November 2018     Published: 30 November 2018
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Abstract

Multinational corporations have contributed to the unfair phenomenon of tax base erosion and profit shifting by taxation planning and transferring profits into countries or territories with low tax rates. The OECD, under the push from G20 member countries, launched 15 action plans for BEPS (Base Erosion and Profit Shifting), as an attempt to drive reforms in tax systems across different countries for a just and efficient taxation system. As part of this global initiative, the Taiwanese government is also amending its tax laws for better consistency, substance, transparency and fairness. This paper examines Google, Amazon and Starbucks headquartered in the U.S. and Feng Tay headquartered in Taiwan and analyzes how multinational corporations leverage the difference in tax rates in different countries and the existence of bilateral tax agreements for tax planning and profit shifting. The European Commission holds the view that such practices violate the laws of the European Union. This paper conducts an in-depth analysis on the arguments from both sides and develops suggestions on the basis of tax fairness, moral issues and research findings. It is hoped that taxations and profits travel in a just and efficient environment so that taxation fairness benefits economic developments and effective use of resources.

Published in Journal of Finance and Accounting (Volume 6, Issue 5)
DOI 10.11648/j.jfa.20180605.13
Page(s) 117-126
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Transfer Pricing, Intangible Assets, Base Erosion and Profit Shifting

References
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[4] Chou, C. P., Lin, C. J., Tsai, H. C., and Chen, I. F., (2015). Most Recent Developments on BEPS – Assessment of Risks and Intangible Assets. Accounting Research Monthly, (357).
[5] Deloitte Dbriefs Special (2015), OECD Transfer Pricing Guidelines: Nearing the Finish Line.
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Cite This Article
  • APA Style

    Hsiu-li Wu, Shang-Yung Yen. (2018). Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation. Journal of Finance and Accounting, 6(5), 117-126. https://doi.org/10.11648/j.jfa.20180605.13

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    ACS Style

    Hsiu-li Wu; Shang-Yung Yen. Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation. J. Finance Account. 2018, 6(5), 117-126. doi: 10.11648/j.jfa.20180605.13

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    AMA Style

    Hsiu-li Wu, Shang-Yung Yen. Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation. J Finance Account. 2018;6(5):117-126. doi: 10.11648/j.jfa.20180605.13

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  • @article{10.11648/j.jfa.20180605.13,
      author = {Hsiu-li Wu and Shang-Yung Yen},
      title = {Base Erosion and Profit Shifting Case Studies to Examine Conflicting Views on Taxation},
      journal = {Journal of Finance and Accounting},
      volume = {6},
      number = {5},
      pages = {117-126},
      doi = {10.11648/j.jfa.20180605.13},
      url = {https://doi.org/10.11648/j.jfa.20180605.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20180605.13},
      abstract = {Multinational corporations have contributed to the unfair phenomenon of tax base erosion and profit shifting by taxation planning and transferring profits into countries or territories with low tax rates. The OECD, under the push from G20 member countries, launched 15 action plans for BEPS (Base Erosion and Profit Shifting), as an attempt to drive reforms in tax systems across different countries for a just and efficient taxation system. As part of this global initiative, the Taiwanese government is also amending its tax laws for better consistency, substance, transparency and fairness. This paper examines Google, Amazon and Starbucks headquartered in the U.S. and Feng Tay headquartered in Taiwan and analyzes how multinational corporations leverage the difference in tax rates in different countries and the existence of bilateral tax agreements for tax planning and profit shifting. The European Commission holds the view that such practices violate the laws of the European Union. This paper conducts an in-depth analysis on the arguments from both sides and develops suggestions on the basis of tax fairness, moral issues and research findings. It is hoped that taxations and profits travel in a just and efficient environment so that taxation fairness benefits economic developments and effective use of resources.},
     year = {2018}
    }
    

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    AU  - Hsiu-li Wu
    AU  - Shang-Yung Yen
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    DO  - 10.11648/j.jfa.20180605.13
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
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    AB  - Multinational corporations have contributed to the unfair phenomenon of tax base erosion and profit shifting by taxation planning and transferring profits into countries or territories with low tax rates. The OECD, under the push from G20 member countries, launched 15 action plans for BEPS (Base Erosion and Profit Shifting), as an attempt to drive reforms in tax systems across different countries for a just and efficient taxation system. As part of this global initiative, the Taiwanese government is also amending its tax laws for better consistency, substance, transparency and fairness. This paper examines Google, Amazon and Starbucks headquartered in the U.S. and Feng Tay headquartered in Taiwan and analyzes how multinational corporations leverage the difference in tax rates in different countries and the existence of bilateral tax agreements for tax planning and profit shifting. The European Commission holds the view that such practices violate the laws of the European Union. This paper conducts an in-depth analysis on the arguments from both sides and develops suggestions on the basis of tax fairness, moral issues and research findings. It is hoped that taxations and profits travel in a just and efficient environment so that taxation fairness benefits economic developments and effective use of resources.
    VL  - 6
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Author Information
  • Taxation and Accounting Group, College of Business, Feng Chia University, Taichung, Taiwan

  • Graduate Institute of Management of Technology, Feng Chia University, Taichung, Taiwan

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