Explain the terms "Most Favored Nation" and "Base Erosion and Profit Shifting (BEPS)" with reference to the international tax treaties.

(A) Most Favoured Nation clause is usually found in Protocols and Exchange of Notes to Double Taxation Conventions. Under this clause a country agrees to extend the benefits to the residents of the other country, which it had (first country) promised to the residents of third country. It tries to avoid discrimination between residents of different countries. Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits 'disappear' for tax purposes or to shift profits to locations where there is little or no real activity, but the taxes are low, resulting in little or no overall corporate tax being paid.