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Abstract

This article explores the intersections between the global tax reform launched by the Organization for Economic Co-operation and Development (OECD) and the Group of 20 (G20) to tackle base erosion and profit shifting (BEPS) on the one hand, and international rules on trade in services, mostly – the General Agreement on Trade in Services (GATS) under the World Trade Organization (WTO) on the other hand. The GATS entered into force in 1995 to expand trade in services. It covers all measures affecting trade in services, including direct taxation. While the GATS leaves policy space for WTO Members to adopt measures to ensure the effective imposition of direct taxes and to conclude agreements among themselves to avoid double taxation, its negotiators could hardly have envisaged the depth and breadth of the current BEPS reform package, as shown by a recent WTO dispute. This paper provides a systematic analysis of concurrent application of the GATS and the BEPS Package and recommends that WTO Members take actions to avoid potential conflict in applying both sets of rules.

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