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BEPS (Base Erosion and Profit Shifting) and GRI 207 (Global Reporting Initiative - Tax 207) both promote tax transparency and accountability, with BEPS focusing on systemic tax avoidance and GRI 207 requiring corporate tax disclosures. GRI 207 includes four components: tax governance, risk management, stakeholder engagement, and country-by-country reporting. BEPS 2.0 introduces two pillars: reallocating taxing rights to market jurisdictions and establishing a global minimum corporate tax rate of 15% to modernize international tax rules.

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7 views2 pages

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BEPS (Base Erosion and Profit Shifting) and GRI 207 (Global Reporting Initiative - Tax 207) both promote tax transparency and accountability, with BEPS focusing on systemic tax avoidance and GRI 207 requiring corporate tax disclosures. GRI 207 includes four components: tax governance, risk management, stakeholder engagement, and country-by-country reporting. BEPS 2.0 introduces two pillars: reallocating taxing rights to market jurisdictions and establishing a global minimum corporate tax rate of 15% to modernize international tax rules.

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Relationship Between BEPS and GRI 207:

1. BEPS and GRI 207


• BEPS (Base Erosion and Profit Shifting), led by the OECD, focuses on
addressing tax avoidance strategies that exploit gaps or mismatches in tax rules to
reduce taxable income or shift profits to low/no-tax jurisdictions. It aims to improve
international tax rules and enhance tax transparency.
• GRI 207 (Global Reporting Initiative - Tax 207) is a sustainability reporting
standard that focuses on corporate tax transparency. It requires companies to
disclose their tax policies, governance, and country-by-country tax contributions.
• Connection: Both BEPS and GRI 207 aim to promote tax transparency and
accountability. While BEPS addresses systemic tax avoidance at a global level, GRI
207 ensures companies disclose their tax-related practices to stakeholders, increasing
transparency and trust.

Four Components of GRI 207:


1. 207-1: Tax Governance and Control
Describes the company’s tax governance framework, tax policies, and tax compliance
controls.
2. 207-2: Tax Risk Management
Explains how companies identify, manage, and mitigate tax risks.
3. 207-3: Stakeholder Engagement
Details how companies engage with stakeholders and address the social impact of
their tax practices.
4. 207-4: Country-by-Country Reporting
Requires disclosure of country-level data, including revenue, taxes paid, and
economic activity, to ensure transparency.

BEPS 2.0 and Its Two Pillars:


1. Pillar One: Reallocation of Taxing Rights
• Addresses the challenges of digitalization and globalization by reallocating
taxing rights to market jurisdictions where consumers/users are located, even if
companies have no physical presence.
• Applies to large multinational enterprises (MNEs) with global revenues
exceeding certain thresholds (e.g., €20 billion). A portion of their profits is
reallocated to market jurisdictions.
2. Pillar Two: Global Minimum Tax
• Introduces a global minimum corporate tax rate of 15% to address tax
competition among countries.
• Ensures that MNEs pay a minimum level of tax regardless of where they
operate or shift profits.
• Includes mechanisms such as the Income Inclusion Rule (IIR) and the
Undertaxed Payments Rule (UTPR) to enforce the minimum tax globally.

The two pillars aim to modernize international tax rules to address the tax challenges
arising from the digital economy and ensure fair taxation in a globalized world.

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