August 17th, 2016

Introduction

All countries, including underdeveloped countries, are well aware of the strain that has been placed on tax administrators throughout the world in grappling with the billions if not trillions of revenue loss associated with base erosion techniques and strategies utilized by many multinational business enterprises (MNEs) that are principally driven by tax avoidance and not primarily based on sound business practices. This base erosion is visibly greater when comparing the aggregate tax loss impact suffered by high tax jurisdictions from more modest tax jurisdictions. But as long as there is a moderate if not high level of taxation in a particular country, there are indeed many ongoing efforts to strip out earnings through interest, business transactions among related parties and nimble supply chain participants.