Implications for the concept of ‘tax benefit/advantage’ as prescribed in the Australian and British general anti-avoidance rules in tackling tax base erosion and profit shifting

Abstract

An increasing number of multi-national enterprises have arranged their corporate structures in a way which sharply reduces or completely eliminates their tax liabilities, both at home and abroad. This practice, referred to as base erosion and profit shifting (BEPS), has become a pertinent feature in the international tax domain. In response to this growing problem the Organisation for Economic Cooperative Development released an Action Plan in July 2013. In the coming years, BEPS is likely to remain high on political agendas around the world and it is expected that many countries will implement the OECD’s Action Plan recommendations and introduce or enhance their own general anti-avoidance legislation as a strategy to counter BEPS. This paper specifically examines the recent amendments to the Australian general anti-avoidance rule and the recently introduced British general anti-abuse rule in 2013 with regard to the definition of ‘tax benefit/advantage’. An analysis of tax benefit/advantage concept within the respective anti-avoidance rules is compared and contrasted to the wide definition of tax benefit stipulated in Action Item 12 of the OECD Action Plan. The likely consequences and some policy implications for tackling BEPS and tax avoidance generally are canvassed.