This lesson provides a structured overview of the 15 BEPS Actions, categorizing them by their objectives and explaining how they address different forms of tax avoidance.

• Coherence Actions: These actions aim to bring coherence to domestic rules that affect cross-border activities. Action 2 neutralizes the effects of hybrid mismatch arrangements by preventing them from being used for BEPS activity. Action 3 strengthens Controlled Foreign Company (CFC) rules to reduce the incentive for taxpayers to shift income into foreign subsidiaries in low-tax jurisdictions. Action 4 limits interest deductions by establishing rules that link an entity’s net interest deductions to its level of economic activity within the jurisdiction.

• Substance Actions: These actions reinforce substance requirements to ensure taxation aligns with value creation. Action 5 counteracts harmful tax practices and preferential regimes through a minimum standard that requires peer review. Action 6 prevents treaty abuse through model tax treaty provisions and recommendations (the subject of Lesson 6.4). Action 7 prevents the artificial avoidance of Permanent Establishment (PE) status through commissionaire structures and other arrangements. Actions 8-10 provide comprehensive transfer pricing guidance for applying the arm’s length principle to intangibles, risks, capital, and other high-risk transactions.

• Transparency and Certainty Actions: These actions improve transparency and provide greater tax certainty. Action 11 involves measuring and monitoring BEPS through data collection and analysis. Action 12 requires mandatory disclosure of aggressive tax planning arrangements. Action 13 establishes Country-by-Country Reporting as a minimum standard, ensuring MNEs report annually for each tax jurisdiction in which they do business. Action 14 makes tax treaty dispute resolution (Mutual Agreement Procedure) more timely, effective, and efficient through a minimum standard with peer review.

• Cross-Cutting Actions: Action 1 addresses the tax challenges of the digital economy, laying the groundwork for BEPS 2.0. Action 15 develops the Multilateral Instrument (MLI) to implement tax-treaty-related BEPS recommendations efficiently across the global tax treaty network.