Action Plan on Base Erosion and Profit Shifting
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Globalisation is not new, but the pace of integration of national economies and markets has
increased substantially in recent years. The free movement of capital and labour, the shift of manufacturing bases from high-cost to low-cost locations,the gradual removal of trade barriers, technological and telecommunication developments, and the ever-increasing importance of managing risks and of developing, protecting and exploiting intellectual property, have had an
important impact on the way cross-border activities take place. Globalisation has boosted trade and increased foreign direct investments in many countries.Hence it supports growth, creates jobs, fosters innovation, and has lifted millions out of poverty.
increased substantially in recent years. The free movement of capital and labour, the shift of manufacturing bases from high-cost to low-cost locations,the gradual removal of trade barriers, technological and telecommunication developments, and the ever-increasing importance of managing risks and of developing, protecting and exploiting intellectual property, have had an
important impact on the way cross-border activities take place. Globalisation has boosted trade and increased foreign direct investments in many countries.Hence it supports growth, creates jobs, fosters innovation, and has lifted millions out of poverty.
Globalisation impacts countries’ corporate income tax regimes. As long ago as the 1920s, the League of Nations recognised that the interaction of domestic tax systems can lead to double taxation with adverse effects on growth and global prosperity. Countries around the world agree on the need to eliminate double taxation and the need to achieve this on the basis of agreed international rules that are clear and predictable, giving certainty to both governments and businesses. International tax law is therefore a key pillar in supporting the growth of the global economy.
As the economy became more globally integrated, so did corporations. Multi-national enterprises (MNE) now represent a large proportion of global GDP. Also, intra-firm trade represents a growing proportion of overall trade.
Globalisation has resulted in a shift from country-specific operating models to global models based on matrix management organisations and integrated supply chains that centralise several functions at a regional or global level.
Moreover, the growing importance of the service component of the economy, and of digital products that often can be delivered over the Internet, has made it much easier for businesses to locate many productive activities in geographic locations that are distant from the physical location of their customers. more
Globalisation has resulted in a shift from country-specific operating models to global models based on matrix management organisations and integrated supply chains that centralise several functions at a regional or global level.
Moreover, the growing importance of the service component of the economy, and of digital products that often can be delivered over the Internet, has made it much easier for businesses to locate many productive activities in geographic locations that are distant from the physical location of their customers. more
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