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Among the ways in which multinational enterprises (MNEs) can shift profits from one jurisdiction to another in order to minimize taxes, one of the simplest and most widely employed involves the payment of interest to related parties and third parties. Thus. it is not surprising that the Organisation for Economic Co-operation and Development's (OECD's) Action Plan on Base Erosion and Profit Shifting (BEPS) identified the deduction of interest and other financial payments as a significant source of BEPS concerns, and that BEPS action 4 was charged with developing -recommendations regarding best practices in the design of rules to prevent base erosion through the use of interest expense... and other financial payments that are economically equivalent to interest payments". The author considers how Canada should respond to the recommendations of BEPS action 4 in light of recent developments in the United States and other jurisdictions. The first section of the paper explains the ways in which interest payments may be used to shift profits from one jurisdiction to another in order to minimize taxes, considering both inbound investments and outbound investments, and why this form of BEPS may be problematic as a matter of tax policy. The second section reviews Canadian responses to these profit-shifting strategies prior to BEPS action 4. The third section summarizes the recommendations of BEPS action 4 and the extent to which these recommendations have been implemented in other countries. The final section considers how Canada should respond to BEPS action 4. [ABSTRACT FROM AUTHOR]