OECD Plans to Close Tax Gaps
The Organisation for Economic Co-operation and Development (OECD) announces plans to update tax laws so that they can not be abused by large companies…
The Organisation for Economic Co-operation and Development (OECD) has said that worldwide tax laws are outdated and are open to exploitation by globalised corporations.
National tax laws, they say, have not kept pace with the ability of big businesses to use laws to artificially reduce their tax obligations.
With this in mind the OECD are launching an Action Plan on Base Erosion and Profit Shifting (BEPS) – this will comprise a "roadmap" for "governments to collect the tax revenue they need to serve their citizens".
So far this year there have been a number of high profile instances of large corporations being publicly named and shamed about their tax avoidance schemes.
Amazon, Google and Starbucks have all been named for their complex tax affairs, often involving UK-based offices "paying" overseas branches of the same company for products and services. The offshore subsidiaries have most often been in countries with a lower tax burden than that of the UK, like Luxembourg for instance.
Starbucks said it makes no profit in the UK despite having the capability to finance the expansion of the brand with approximately 500 branches in the UK. It paid an apparent £8.6 million in tax between 1999 and 2009 and then paid no tax in the years up until 2012/2013.
After the Public Accounts Committee accused the coffee chain of immorality for reducing its UK tax bills, the global drinks giant, that was "unprofitable" and recently paid no tax in the UK, promised to pay HMRC "somewhere in the range of £10 million".
The OECD’s action plan is the result of the last G20 meeting where leading nations discussed the subject of tax avoidance and will be rolled out over the next two years.
In the Action Plan, there are 15 specific actions that governments will have to take in order to prevent corporations paying little or no tax. Google was criticised by British MPs for channeling £3.3 billion though offices in Dublin and paying very little UK tax on those vast sums.
Voicing his opinion on the OECD action plan on social media channel, twitter, the Prime Minister, David Cameron, said that he was "delighted" with the BEPS plan.
The Chancellor, George Osborne, is currently attending the Russia G20 summit in Moscow and is also backing the Aciton Plan.
Read the BEPS Action Plan (PDF)