
BEPS Action 11 - Measuring and Monitoring BEPS
BEPS Action 11 attempts to find a way to track the scale and economic impact of BEPS. This action is different from other actions in that it is of a supportive nature towards the BEPS Project then that it targets BEPS itself. In quantifying BEPS the OECD recognizes that it is difficult to measure BEPS due to the limitations of available data sources and the fact that any indicator can only provide a general indication. Each indicator’s outcome should be heavily qualified for interpretation of that outcome.
These two limitations have not withheld the OECD to attempt to measure BEPS. In so doing it creates a starting point to improve data sources and increase the insights obtained with the indicators. A future path for measuring BEPS has been identified in recognition of the limitations:

Currently, a total of six BEPS indicators have been developed that show strong indications of BEPS. BEPS Action 11 states that by combining these indicators in a dashboard they together can provide evidence of the existence of BEPS, and its continued increase in scale, over time. Improving data quality will allow for better future insights.
The six BEPS indicators are:
- Concentration of high levels of foreign direct investment relative to gross domestic product
- Differential profit rates compared to effective tax rates
- Differential profit rates between low-tax locations and worldwide multinational enterprise operations
- Effective tax rates of large multinational enterprise affiliates relative to non-multinational enterprise entities with similar characteristics
- Concentration of high levels of royalty receipts relative to research and development spending
- Interest expense to income ratios of multinational enterprise affiliations in high-tax locations
Indicators 1 and 5 are country indicators, whereas the others are calculated from enterprise level financial data. The indicators for which enterprise level data is used to calculate are not calculated on enterprise level though. A sample of multinational enterprises is taken on which the calculations take place. The outcomes of these indicators are on a macro level and should not be used to make calculations for individual enterprise as that does not provide enough context in itself. Only when used in conjunction with industry-level calculations one could make observations on how individual enterprises compare within an industry. And even then it is difficult to derive conclusions based on these calculations.
Besides the six presented indicators there are two more potential indicators that have been proposed which may be used in the future if the data becomes available to calculate them:
- Profit rates compared to effective tax rates for multinational enterprise domestic headquarter and foreign operations
- Differential rates of return on foreign direct investment related to special purpose entities
The use of these indicators is to measure and monitor BEPS in a structured approach. The indicators are as the name states, indicators. They serve to point towards situations where BEPS may be present. If that is the case further research must be undertaken to validate if indeed BEPS is taking place.
If BEPS indeed is taking place then this will be for sure a starting point to further the BEPS project or to adjust the existing BEPS Actions.
The complete documentation with the recommendations can be found on the OECD BEPS Documentation page and on the website of the OECD.