An Islamic Game Theory approach for overcoming base erosion profit shifting challenges for the Organization of Islamic Cooperation (OIC)

Abstract

BEPS (Base erosion and profit shifting) challenges have been present between the countries of the OIC for a considerable period of time, leading to significant tax losses to its societies. This has further led to challenges, as tax dues, demanded by Islamic law, are not collected. In this situation, corporations and individuals aim to exploit tax benefits in order to minimise their overall taxation. We here present a new framework integrating Game theory and Islamic values for addressing the challenges with BEPS for the OIC. The framework outlines seven key strategies in order to address BEPS issues, resolving the potential tax abuses by corporations while maintaining closer alignment with Islamic values. Furthermore, our framework provides a deep learning cooperative game theory model for the optimisation of the tax rates in the multilateral taxation agreement in order to create the most overall benefit for all participants of the OIC.