Arab Today, arab today oecd reveals plan for tax clampdown on multinationals
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Arab Today, arab today
Arab Today, arab today

OECD reveals plan for tax clampdown on multinationals

Arab Today, arab today

Arab Today, arab today OECD reveals plan for tax clampdown on multinationals

The Organisation for Economic Cooperation and Developmen
Paris - AFP

The world's advanced economies announced Monday a long-awaited plan to close the loopholes on tax-avoiding multinationals that cost countries more than $100 billion a year, declaring: "Playtime is over."

Low tax bills for big names such as Google and McDonald's, which managed to sharply reduce the amount due while remaining within the law, have provoked public outrage in recent years.

Now the wealthy nations' policy advisory group, the Organisation for Economic Cooperation and Development, has revealed its final recommendations: a 15-point plan to prevent firms from exploiting different countries' tax rules.

The charity Oxfam decried the scheme as a "toothless" package that will do nothing to stop poor nations being cheated out of billions of dollars. Businesses fretted it could lead to double taxation.

But the OECD was confident the plan would be effective.

"Playtime is over," Pascal Saint-Amans, who supervised the drawing up of the so-called Base Erosion and Profit Shifting (BEPS) plan, told AFP.

Companies will find it harder and harder to game national tax systems, Saint-Amans predicted.

- Businesses avoid $100-240bn taxes -

"Today, there are wide open roads. Tomorrow, those who want to bypass their taxes will have to do so undercover. We are covering the ground with radars," he said.

The anti-tax avoidance plan, which applies to international companies with revenues of at least 750 million euros, is to be submitted for approval by the Group of 20 top world economies at a meeting of finance ministers next week.

It will then go to a G20 leaders' summit in November for their endorsement.

The OECD calculates that national governments lose $100-240 billion (89-210 billion euros), or 4-10 percent of global tax revenues, every year because of the tax-minimising schemes of multinationals. Saint-Amans described that as a "very conservative" figure.

The 15-point plan seeks to oblige multinationals to pay tax in the country where their main business activity is based.

The package represents "the first substantial -- and overdue -- renovation of the international tax standards in almost a century," the 34-nation, Paris-based OECD said in its report.

The OECD says the scheme will:

- Stop companies exploiting differences in national tax rules and bilateral treaties, for example to win no-tax status in two places at once.

- Prevent companies from shifting profits to lower-taxation countries where their foreign subsidiaries are based, or from using technicalities to declare they are based in low-tax jurisdictions.

- Close loopholes that let companies shift debt within a group towards higher-tax countries, allowing them to declare lower profits there.

- Oblige multinationals to detail their business country by country to the tax authorities.

The OECD called for a multilateral deal by the end of 2016 enabling countries to update bilateral tax treaties in line with the new plan without the need to renegotiate them one by one.

It offered no action specific to the digital economy -- everything from Internet shopping to high-speed financial market traders -- but said it was a high-risk area, which has been tackled within the overall plan.

- 'All bark, no bite' -

Not everyone was convinced by the plan, which comes near a year after "LuxLeaks" revelations that some of the world's biggest companies -- including Pepsi and Ikea -- had lowered their tax rates to as little as one percent in secret pacts with tax authorities in Luxembourg.

"Rich governments are all bark and no bite when it comes to corporate tax dodging," said Oxfam France's advocacy officer on tax and justice, Manon Aubry.

The OECD plan "will not stop multinational companies cheating poor countries out of billions of dollars in taxes -- money which is desperately needed to tackle poverty and inequality," Aubry said in a statement.

Developing countries played no formal role in developing the plan, she added.

"As a result it fails to properly address the needs of poor countries and only goes a small way towards reforming a dysfunctional global tax system that facilitates corporate tax dodging."

The OECD package failed to legislate for multinational companies to have pay tax where they do real business or to stop the use of tax havens, while allowing some "harmful" tax regimes to remain in place until 2021, she said.

Businesses worried, however, that the OECD plan could lead to some firms paying their taxes twice.

"Business does still have concerns that some of the recommendations may lead to double taxation of income, and many important details remain to be worked out," said Will Morris, chairman of the tax committee of the Business and Industry Advisory Committee to the OECD.

Despite its reservations, the business committee said in a statement that there was a "legitimate public concern" about companies paying no taxes in different jurisdictions. The OECD plans "appropriately respond to those concerns", it said.

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Arab Today, arab today oecd reveals plan for tax clampdown on multinationals Arab Today, arab today oecd reveals plan for tax clampdown on multinationals

 



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