Challenges before international business such as base erosion and profit shifting (BEPs), tax avoidance and shifting between a holding company and a subsidiary located in two different tax sovereigns may be resolved by which one of the following?
Technology transfer transactions, cyber space
Concept: Base erosion and profit shifting (BEPS) is the practice by which multinationals move taxable profit from a high-tax country to a low-tax one, often between a holding company and its subsidiary in different tax jurisdictions, so that the tax base of the higher-tax country is eroded.
Much of this shifting today happens through intangibles and digital activity - for example, a parent charges its subsidiary heavy royalties for technology or routes revenue through servers in a low-tax location, so the profit is booked where tax is lowest. For instance, a tech group can license software or brand rights from a subsidiary in a tax haven and load costs onto the high-tax unit.
Option check: The Montreal Protocol deals with ozone-depleting substances and the Kyoto Protocol with greenhouse-gas emissions, so both are environmental treaties unrelated to taxation; the Vienna Convention concerns the law of treaties and diplomatic relations, not corporate tax shifting. The remaining option - technology-transfer transactions and cyber space, where such value creation and profit shifting occur - is the avenue the official key selects for addressing these challenges.
Hence, as per the official key, the answer is technology transfer transactions, cyber space.
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