What have we learned about international taxation and economic substance?

The landscape of international corporate taxation will change significantly as a result of the G20/OECD project on base erosion and profit shifting (BEPS). The contours of this new terrain have become apparent since the publication of the main outputs of the project in October 2015.The BEPS outputs aim to strengthen the system and give better tools to tax authorities – if they have the capacity and will to use them.

Overall, however, the proposals are a patch-up of existing rules, making them even more complex and dependent on technical expertise to administer. They do not tackle the more fundamental flaws of the system in a coherent way, but are an important first step on a longer road. It is therefore very important for African countries to inform themselves about the implications of the BEPS proposals, and to form their own views on which aspects may benefit them.