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Generate QuizIn the context of international taxation, what is the primary purpose of 'Base Erosion and Profit Shifting' (BEPS) frameworks initiated by the OECD?
- To encourage multinational corporations to shift profits to low-tax jurisdictions
- To eliminate all corporate taxes globally
- To prevent multinational corporations from exploiting gaps in tax rules to avoid paying taxes
- To standardize the GST rates across all countries
Answer: To prevent multinational corporations from exploiting gaps in tax rules to avoid paying taxes
BEPS refers to aggressive tax planning strategies used by MNCs to shift profits to low or no-tax locations where they have little economic activity, thereby eroding the tax base of high-tax countries where the actual value is created. The OECD/G20 BEPS project aims to close these loopholes and ensure profits are taxed where economic activities occur.