G20-OECD tax plan 'papering over cracks in a broken system'

19 July 2013 - 9:09am
Press release

Responding to this morning's publication of the OECD Action Plan on Base Erosion and Profit Shifting for the G20 finance ministers meeting in Moscow today, Murray Worthy, tax campaigner at War on Want, said:

“This plan is papering over the cracks in a broken system, rooted in an outdated and irrelevant model of corporate taxation. It might be able to tackle the worst of corporate tax dodging, but it won't fix the system.

“The OECD is desperately trying to maintain the fiction that the different subsidiaries of multinational companies like Apple or Amazon are wholly separate companies, rather than recognising them as the single entities they so obviously are.

“The prospects of meaningful change are also seriously limited when the UK government has being doing the exact opposite of this report's recommendations for the last three years – such as making it easier for multinationals to dodge tax by shifting their profits through tax havens.

“It is also hard to see how these plans will help the world's poorer countries when they are all locked out of the OECD's rich country club.”

The OECD action plan published today sets out recommendations for areas of the tax system that should be addressed by governments over the next two years to deal with the ways multinational companies can shift profits into low tax jurisdictions to avoid paying tax elsewhere.

David Cameron's domestic tax policy has come under heavy criticism from tax justice activists since the coalition government took power in 2010. In 2012, the government removed Britain's main anti-tax haven (Controlled Foreign Company) rules in a move set to cost the UK £1 billion a year and developing countries £4 billion a year. This runs completely contrary to the OECD's recommendation for countries to strengthen their Controlled Foreign Company rules to tackle profit shifting.

The report by the OECD, a Paris-based think tank comprising 34 of the world's richest countries, proposed allowing G20 countries that are not part of the OECD be allowed to take part in the project – yet excludes the rest of the world's poorer countries from the negotiations.

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