A Decade of BEPS: Progress in Transparency, Challenges in Certainty

In October 2015, the OECD and the G20 published the final reports of the Base Erosion and Profit Shifting (BEPS) project, culminating an initiative aimed at addressing some of the major weaknesses in the international tax system. Ten years later, the results show significant progress, but also new challenges that are likely to shape the evolution of international taxation over the next decade.

BEPS represented much more than a set of anti-abuse measures. It marked the beginning of a new era characterized by greater levels of transparency, unprecedented multilateral coordination, and a growing concern for aligning taxation with the effective creation of economic value. The question it placed at the center of the debate remains as relevant as it is disruptive: Should profits be taxed where they are recorded on the books or where value is actually generated?

Ten years later, the debate no longer revolves solely around transparency or the detection of aggressive tax planning structures. The first decade of BEPS was dominated by transparency and enforcement. The second will be judged by something else: its ability to curb the rise in international tax disputes, prevent double taxation, and provide taxpayers with an environment of greater legal certainty and predictability.

Transparency and Value Creation

Before BEPS, the international tax system was based on principles developed for an industrial economy that could hardly have anticipated the digitization of business, the growing importance of intangible assets, and the sophistication of multinational structures. The OECD estimated that tax base erosion and profit shifting practices could result in losses of between 4% and 10% of global corporate tax revenue, equivalent to up to USD 240,000 million annually.

The project’s fifteen actions sought to strengthen the coherence of the international tax system, combat treaty abuse, update international tax rules, and deepen cooperation among tax administrations. However, its most significant legacy has likely been the transformation of transparency into an essential component of modern tax administration.

The implementation of Country-by-Country Reporting (CbCR) radically changed the availability of information for tax authorities. Currently, more than 120 jurisdictions participate in this system, and thousands of exchange agreements allow tax administrations to access a global overview of the distribution of revenue, profits, assets, and employees of multinational groups.

The reduction in information asymmetries has also transformed corporate tax management. Tax decisions are no longer evaluated solely from a tax efficiency perspective but now incorporate considerations of governance, sustainability, reputation, and risk management.

The Consolidation of Transfer Pricing

While Pillar Two represents the most visible evolution of the international tax agenda, Transfer Pricing remains its main technical backbone.

BEPS did not replace the arm’s-length principle; it strengthened it. Actions 8, 9, and 10 reinforced the need to link the allocation of profits to economic substance, effective risk control, and value creation. The mere contractual allocation of functions, capital, or intangibles was no longer sufficient to justify profits in entities with limited activity.

As a result, international tax audits have evolved significantly. Functional analyses have gained greater prominence, the use of CbCR data has increased, and scrutiny of structures related to intangibles, intra-group financing, and corporate restructurings has intensified.

The available evidence also suggests that the BEPS measures have produced concrete results. The OECD has observed a decline in the artificial concentration of profits in certain jurisdictions and greater alignment between the location of profits and the underlying economic activity. While aggressive tax planning has not disappeared, it seems reasonable to conclude that there is now a closer relationship between taxation and effective value creation.

Latin America and Institutional Strengthening

From a Latin American perspective, the main contribution of BEPS likely lies not in any specific rule, but in the institutional strengthening of tax administrations.

Transparency standards, the exchange of information, and the gradual adoption of CbCR have helped reduce significant information asymmetries. For many tax administrations the region, access to international information has brought about a structural change in how they audit complex multinational operations.

However, progress has been uneven. Challenges persist regarding specialized resources, technological infrastructure, and administrative capacity to implement increasingly sophisticated standards. Consequently, while a significant part of the international debate currently centers on Pillar Two, many Latin American tax administrations remain focused on the effective implementation of rules on Transfer Pricing, intra-group financing, and information exchange.

In this context, the main legacy of BEPS for the region appears to lie in the institutional modernization of tax administrations and the consolidation of international cooperation as a permanent tool for tax enforcement.

Pillar Two and the Limits of International Coordination

Pillar Two confirms that BEPS was not a closed-ended project, but rather the beginning of an ongoing process of transforming international taxation. The 15% global minimum tax is likely the most ambitious reform of recent decades and aims to reduce incentives to shift profits to low-tax jurisdictions.

However, its implementation has also highlighted some of the complexities of the new system. Coordination mechanisms, safe harbors, and varying adoption rates have facilitated its implementation but have also introduced additional layers of regulatory complexity.

Added to this is an increasingly significant geopolitical dimension. The stance taken by the United States and other major economies, growing regulatory fragmentation, competition to attract investment, and tensions between fiscal sovereignty and multilateral coordination will be just as decisive as the rules of the global minimum tax itself. Recent experience shows that preserving international consensus can be just as complex as building it in the first place.

The Challenge of the Coming Decade

Ten years after the final reports of 2015, the overall assessment of BEPS is positive. The initiative strengthened transparency, reduced loopholes for certain forms of aggressive tax planning, and promoted levels of international cooperation that seemed hard to imagine just a decade ago.

However, experience also shows that more rigorous tax enforcement must be accompanied by effective mechanisms to prevent double taxation, resolve disputes, and provide greater legal certainty. The success of the next phase will depend not only on collecting more revenue or identifying more risks, but also on the system’s ability to provide rules that are understandable, manageable, and predictable for tax authorities and taxpayers alike.

For Latin America, this means not only adopting international standards but also building permanent institutional capacities that allow for their effective and consistent implementation.

The first decade of BEPS demonstrated that the international tax system could be more transparent. The next decade must demonstrate that it can also be more predictable.