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OECD discussion draft on Action 4 (interest deductions and other financial payments)
On 18 December 2014, the OECD published a discussion draft on Action 4 (interest deductions and other financial payments) of the BEPS Action Plan. The Action Plan recognises that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for business. Taxand is honoured to provide combined feedback from around the world on the OECD discussion draft with respect to Action 4 of the BEPS Action Plan.
Action 4 of the BEPS Action Plan focuses on best practices in the design of rules to prevent base erosion and profit shifting using interest and other financial payments economically equivalent to interest. The discussion draft stresses the need to address BEPS using deductible payments such as interest that can give rise to double non-taxation in both inbound and outbound investment scenarios.
Taxand agrees that examining existing approaches to tackling these issues and setting out different options for approaches that may be included in a best practice recommendation is required and has provided written comments to assist the OECD in their work on Action 4 based the practical experience we have as tax advisors and transfer pricing specialists.
Luis Antonio Monroy
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