Almost two years ago, the Organisation for Economic Co-operation and Development launched a radical and far-reaching review of the international tax system. The project's name, BEPS (base erosion and profit shifting), provides a good insight into its objectives: it is nothing less than an attempt by the OECD to proof the international tax system against what is perceived as widespread tax avoidance by multinational enterprises.

Because of its wide-reaching nature, the work of the BEPS project was split into 15 action groups dealing with such diverse topics as the digital economy, hard to value intangibles and hybrid mismatches. In this special edition of Jones Day's Global Tax Updatenewsletter, Jones Day tax lawyers provide summaries of the seven action groups of the BEPS project that have already reported. You can access these reports by clicking on the links at right on this page. The other eight action groups are due to report at the end of September 2015, and a further edition of the BEPS special edition will be published as soon as possible after that.

Even though the BEPS project has not ended, there is no mistaking that it will likely have a profound impact on the international tax system. Some countries have already started implementing their own versions of the BEPS recommendations. In its 2015 Finance Act, the UK introduced the diverted profits tax, a new tax which aims to counter arrangements in which MNEs ensure that their presence in the UK falls short of constituting a permanent establishment and therefore escape UK tax. The new rules are wide and despite what may first appear, are likely to catch situations which are not currently contemplated. They also seek, very deliberately, to be UK tax treaty "proof".

In other countries, reaction to BEPS has been more circumspect. In a letter to the US treasury, published at the end of June, US Senate Finance Committee Chairman, Orrin Hatch, and Chairman of the US House Ways and Means Committee, Paul Ryan, warned that in their view, some of the BEPS project proposals would adversely affect US companies and urged the US treasury to consult more widely before agreeing to certain of the measures suggested by the BEPS project.

The implementation of BEPS proposals is itself an interesting subject. There is no doubt that measures need to be implemented at the local level, but the fact that certain jurisdictions have already implemented certain BEPS recommendations means that, contrary to what certain individuals had feared (or perhaps hoped), it is unlikely that failure to implement by one country will stall the BEPS project. In addition, there are a number of rapidly growing economies which are not part of the BEPS project that may well decide to use the BEPS recommendations as a blueprint for their domestic rules, whether or not they are finally implemented by the members of the BEPS project. In short, BEPS is going to have a significant impact on international tax rules.