Global Daily Tax News, OECD Marks 10 Years Since BEPS Action Plan's Release, (Oct 17, 2025)

The OECD has released a new report, prepared for G20 policymakers, on progress made on tackling tax base erosion and profit shifting (BEPS) since the release of the OECD's BEPS Action Plan a decade ago.

The report discusses how the Action Plan has changed the international tax landscape. While OECD progress reports on BEPS typically cover only the four BEPS minimum standards, the new report discusses changes brought about under the entire plan, which included 15 Actions.

Among numerous other things, the report notes evidence that the BEPS Project has led to a greater alignment of profit and substance; that there is less competition between jurisdictions through statutory tax rates; and jurisdictions' tax rates on profits now have a lesser impact on MNE decision making.

Further, the report says increased transparency has led to reduced BEPS activities, and the project has delivered increased certainty regarding tax outcomes and risk.

The report notes, for instance, that:

• Controlled foreign company (CFC) rules under Action 3 have been shown to significantly reduce profits booked in low-tax jurisdictions, particularly where little real economic activity exists;

• Taxable income has been shown to increase in jurisdictions introducing rules that limit the deductibility of interest under Action 4; and

• The introduction of documentation requirements under Action 13 and revised transfer pricing rules under Actions 8– appear to have reduced profit shifting and increased CIT revenues in some cases.

The report says, "A key objective of the BEPS Project was to curb the misalignment of profits with the location of economic substance, and although measuring misalignment is challenging, evidence suggests that this misalignment has been reduced on average. For example, one commonly-used metric of misalignment is ratios of profits to employees."

"While a variety of economic factors besides BEPS activity can cause variation in this ratio, extremely high levels of profits to employees, which have been observed in investment hubs, are commonly considered evidence of BEPS. Since the launch of the BEPS Project, the ratio of profits to employees for MNEs' operations in investment hubs has dropped by 27 percent. This may be evidence of reduced shifted profits or it may reflect the fact that the MNEs have sought to strengthen economic substance (i.e., tangible assets and employees) in these jurisdictions, or both."

The OECD intends to follow up on the latest publication with an additional report that will explore ways to simplify international tax rules, to make the changes easier to implement, particularly for developing countries, while also promoting and improving tax certainty to reduce compliance costs for taxpayers and tax administrations and foster growth and cross-border investments.