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BEPS Action 4 - When theory meets practice
First published in Tax Analysts, 19 May 2015
On 18 December 2014, the OECD released a discussion draft on Action 4 of the base erosion and profit-shifting action plan relating to interest deductions and other financial payments for public consultation.
The discussion draft addresses BEPS issues around the deduction of interest and other financial payments, but it fails to define excessive interest deductions, which is the perceived BEPS concern. It is evident that the proposals set out in the discussion draft go far beyond action to counter BEPS.
Moreover, the work on BEPS Action 4 should be more closely aligned to other action items that also concern the deductibility of interest payments in order to result in a consistent and holistic approach.
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