The term 'Base Erosion and Profit Shifting' is sometimes seen in the news in the context of
Answer & explanation
Answer: (b) curbing of the tax evasion by multinational companies
Base Erosion and Profit Shifting (BEPS) means tax-planning strategies by which multinational companies use gaps in tax rules to move profits artificially to low-tax or no-tax places. The OECD/G20 BEPS Project is the global effort to curb this, so 'curbing tax evasion by multinational companies' is the closest option.
- ✓ (b) BEPS is about multinationals shifting profits to low or no-tax locations to avoid paying tax. The OECD calls it tax avoidance; of the four options, this is the only one about tax.
- ✗ (c) Exploitation of a country's genetic resources by companies is the issue of biopiracy and access-and-benefit-sharing, not profit shifting.
- ✗ (d) Ignoring environmental costs in development projects is a matter for environmental impact assessment, not for tax rules.
Remember · BEPS = multinationals shifting profits to low-tax places to cut tax; countered by the OECD/G20 BEPS Project (15 actions) so that profits are taxed where value is created.
Sources
- OECD: Base erosion and profit shifting (BEPS) ↗ “relates to tax planning strategies that multinational enterprises use to exploit loopholes in tax rules to artificially shift profits to low or no-tax locations as a way to avoid paying tax”
Question and answer: UPSC's official GS Paper I (2016, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·