The correct option is (b).
Explanation
Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies used by multinational enterprises (MNEs) that exploit gaps and mismatches in tax rules to avoid paying tax. This is a major concern in international taxation and global economic governance.
Detailed Analysis
- Base Erosion: This involves the use of financial mechanisms (such as deductible payments like interest or royalties) to reduce the taxable income (tax base) in a high-tax jurisdiction.
- Profit Shifting: This involves moving profits from jurisdictions where economic activities take place and value is created to low-tax or no-tax locations (often called tax havens), where there is little or no actual economic activity.
- Global Initiative: The OECD (Organisation for Economic Co-operation and Development) and the G20 countries have collaborated on the BEPS Project to create a single set of consensus-based international tax rules to address these practices.
- Relevance to Options:
- Option (a) refers to resource extraction issues, unrelated to fiscal policy.
- Option (b) correctly identifies the context as curbing tax avoidance/evasion by multinationals.
- Option (c) refers to biopiracy or intellectual property issues regarding genetic resources.
- Option (d) refers to Environmental Impact Assessment (EIA) and sustainable development.
Key Takeaway: BEPS is an OECD/G20 framework designed to prevent multinational companies from shifting profits to low-tax jurisdictions to minimize their global tax liability.