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A Roadmap for a Tax on Base-Eroding Payments

John N. Bush


Modern advancements have allowed technology to be a much more integrated component in the 21st Century economy, opening a new frontier that was previously untapped: the ‘digital economy’. As businesses and their operating models gradually turn towards the cyber-sphere, companies have been implementing an increased number of tax avoidance practices to exploit the under-regulated market.


In an effort to combat such practices, the OECD proposed the undertaxed payment rule in its March consultation document. This proposal aimed at profit shifting practices, targeting base-reducing payments and implements a minimum effective tax rate. However, in order for this recommendation to bear fruit, there must be an effective blueprint for developing countries to follow.

John N. Bush is an ILP volunteer. His paper ‘A Roadmap for a Tax on Base-Eroding Payments’ recommends a total of three rules for implementing the OECD proposal, targeting intra-enterprise profit shifting practices that require companies to provide evidence in order to qualify for profit deduction. As multinational corporations raised their presence in the ‘digital economy’, developing countries have become increasingly susceptible to tax avoidance practices. This article provides a guide that can allow national tax practices and regulations to harmonise with the OECD proposal, ultimately protecting developing countries from tax revenue losses resulting from unethical corporate practices.


You can download and read his paper here:


A Roadmap for a Tax on Base-Eroding Paym
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