BEPS Changing International FiscalStandards and the Unchanging Fortunes of‘Sustainable Development’

The OECD led BEPS project attempts key changes to the international taxstandards to limit harmful tax avoidance. First, it is found that calls for the BEPS projectare based on arguments (illicit financial flows and tax competition) that are supportedby limited evidence and hence may not offer much fiscal gain to the developingcountries. Second, it is found that the BEPS project would, through informationsharing, further limit the fiscal jurisdiction of capital importing states. Further it isfound that tax competition, even if existing in a limited form, is a result of the internationaltax architecture and the externalities caused by it. In fact, it is seen that theMNCs actually reduce the inefficiencies created by this tax architecture and therebyreduce transaction costs. By agreeing to the BEPS agenda of information sharing thedeveloping countries would be paying the cost of internalising the externality.