International Tax Planning and Policies of Developing Countries (Base Erosion and Profit Shifting Agreement)

Abstract

The multiplicity and diversity of international trade and investment exchanges in recent years has led to the emergence of different international methods and schemes for tax evasion that may lead to the erosion of tax revenues in industrialized and developing countries. Some countries also sought to reduce tax burdens on mobile capital and thus facilitate attracting investments.  The phenomenon of globalization has led to the rapprochement between countries, and it is clear that it has increased the international mobility of multinational companies and increased their activities. Lower costs may make real business investment more mobile across countries, and financial innovation and liberalization may facilitate international tax avoidance by less free corporations.The effects of financial mobility are further amplified when companies shift income to tax havens and other low-tax countries through financial transactions.  International tax planning is a strategic tool for governments and their financial management. International tax rules are designed to allow multinational companies to reach their customers abroad and to compete with foreign companies in international markets. All this leads to the creation of tax confidence or certainty for multinational companies when they provide tax certainty for companies and eliminates double taxation through clear tax treaties and limited rules that require taxation of foreign profits in the countries of origin, which contributes to creating an attractive environment for investments.Therefore, it is not possible to create effective international tax bases if there is no international tax planning, whose effects will be reflected on all the economies of developing and developed countries, which will enhance revenue mobilization.