Question
The term ‘Base Erosion and Profit Shifting' is sometimes seen in the news in the context of
(a) mining operation by multinational companies in resource-rich but backward areas
(b) curbing of the tax evasion by multinational companies
(c) exploitation of genetic resources of a country by multinational companies
(d) lack of consideration of environmental costs in the planning and implementation of developmental projects
Answer:
B
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Explanation:
The term "Base Erosion and Profit Shifting" (BEPS) refers to tax planning strategies used by multinational companies to exploit gaps and mismatches in tax rules to shift their profits to low or no-tax jurisdictions, thereby eroding the tax base of the countries where they operate. BEPS involves various practices such as transfer pricing manipulation, aggressive use of tax treaties, and artificial shifting of profits to tax havens. International efforts, led by organizations like the OECD (Organization for Economic Cooperation and Development) and G20, aim to curb BEPS and ensure fair and transparent taxation by multinational companies.