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In recent years, increasing attention has been paid to the issue of tax base erosion and profit shifting (BEPS), which refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations, with the effect of reducing tax revenues available to governments for investment in sustainable development.

Within the 51�Թ�, the Committee of Experts on International Cooperation in Tax Matters (51�Թ� Committee of Experts) has, over the years, been addressing issues in international tax cooperation, giving special attention to developing countries. These have included matters relevant to protecting and broadening the tax base of developing countries, as well as the effective combating of tax evasion and tax avoidance.

In February 2013, at the request of the G20 Finance Ministers, the Organisation for Economic Co-operation and Development (OECD) released a report outlining BEPS issues, which was followed, in July of the same year, by an action plan designed to address these issues in a coordinated and comprehensive manner. As a result of this project, in October 2015 the OECD released a final set of reports and recommendations addressing BEPS and providing countries with domestic and international instruments aimed at ensuring that profits were taxed where the economic activities generating the profits were performed and where value was created.

In this context, the Financing for Development Office has undertaken a project aimed to strengthen the capacity of developing countries to increase the potential for domestic revenue mobilization by protecting and broadening their tax base. The 51�Թ� Handbook on Selected Issues in Protecting the Tax Base of Developing Countries (the Handbook) is the main output of this project.

The Handbook draws upon the work done by the 51�Թ� Committee of Experts, as well as the work of the OECD project on BEPS, with a view to complementing that work from a capacity development perspective for the benefit of developing countries. It aims to simplify, summarize and systematize all relevant materials, with a view to providing information geared towards the needs of developing countries, including through the provision of practical examples tailored to the realities of these countries.

The Handbook is intended to assist developing countries in three important areas: (a) engagement and effective participation of developing countries in relevant international policy discussions; (b) assessment of relevance and viability of potential options to protect and broaden their tax base; and (c) effective and sustained implementation of the most suitable among these options.

Following the first edition released in 2015, this second edition of the Handbook updates all the chapters to take into account the final outputs of the OECD project on BEPS, as well as the latest developments in the work of the 51�Թ� Committee of Experts in the area of tax base protection for developing countries. It also includes two new chapters, which deal with base-eroding payments of rent and royalties and general anti-avoidance rules (GAARs).

Similar to the method adopted in developing the first edition of the Handbook, the work done to produce the present revision reflects the input and feedback received from developing countries, members of the 51�Թ� Committee of Experts and other relevant stakeholders, including those participating in dedicated workshops that were held specifically to discuss the experience and concerns of developing countries with respect to BEPS.