October 5, 2015
Statement by the Minister of Finance
Following the Action Plan on Base Erosion and Profit Shifting (BEPS) developed by the OECD Committee on Fiscal Affairs (chaired by Mr Masatsugu Asakawa, Vice Minister of Finance for Foreign Affairs, Japan) in July 2013 and the first set of the reports published in September 2014, the final reports of the BEPS project were published today and submitted to the G20 Finance Ministers and Central Bank Governors Meeting. Regarding this BEPS project, I myself have been actively leading the discussion at the various fora such as the G7 and G20. Japanese government has also strongly supported the work and has taken the initiative in the discussion at the OECD and other occasions. I welcome this achievement of the BEPS project, an epoch-making initiative in the history of the international cooperation in the area of international taxation. It has marked, through the cooperation among countries, the first step toward the ultimate fruition.
Domestic tax systems and existing international tax rules have not recently caught up with the structural change of global economic activities, leaving a gap between the rules and the economic substance of the activities of multinational enterprises (MNEs). Under such circumstances, harmonization of domestic tax systems and alignment of international tax rules with the substance of economic activities are required in order to prevent MNEs from exploiting such gap to artificially manipulate their taxable profits and thereby avoid taxation (i.e., engaging in BEPS). To achieve that goal, the final reports of the BEPS project recommend various measures to tackle BEPS in a holistic manner under the 15 action items dealing with both substantial and procedural matters including measures to improve transparency of and eliminate uncertainty for MNEs. Japan strongly empathizes with the objective of this project and highly appraises those measures agreed to realize that objective. These measures would ensure level playing field for enterprises and firmly establish sense of fairness and trust in tax system among taxpayers.
With the endorsement of the BEPS final reports, we are now moving to the implementation stage (Post-BEPS). The true value of the BEPS project would be fully realized only through coordinated global implementation. The committed countries are expected to steadily implement the agreement of the BEPS project, while refraining from degrading their tax systems. To achieve that goal, Japan will continue to take appropriate steps toward proper implementation. Japan will also continue to lead the discussion in the international arena and contribute to the establishment of the Post-BEPS framework in which various countries including developing countries and the OECD and other relevant international organizations closely cooperate so that the achievement of the BEPS project can be shared widely in the international community.