Global plan to curb tax evasion unveiled at G20 meeting
OECD aims to close tax loopholes and allow countries to tax offshore profits
AP Jul 19, 2013Stashing profits offshore may soon get tougher for companies, thanks to an ambitious plan released Friday by the finance chiefs of the United States, Canada and other leading world economies that want multinationals to pay more taxes.
"National tax laws have not kept pace with the globalization of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes," the Organization for Economic Co-operation and Development said in a statement Friday announcing the new tax plan.
It was unveiled at a meeting of the Group of 20 finance ministers and central bankers in Moscow, including Canada's Jim Flaherty and Bank of Canada governor Stephen Poloz.
Measures to be implemented in 2 years
The Paris-based OECD says that the new 15-point plan includes ways to close loopholes and allow countries to tax profits held in offshore subsidiaries. If it is adopted, the plan would be implemented over the next two years and target such practices as deducting the same expense more than once, in more than one country.
"It is clear multinational companies have developed an unprecedented know-how for minimizing their worldwide tax pressure," French Finance Minister Pierre Moscovici said in Moscow.
"Some big companies manage to have a three or four per cent tax rate on their income worldwide," he added. The proposal aims to develop rules preventing companies from escaping taxes by putting patent rights into shell companies, taking interest deductions in one country without reporting taxable profit in another and forcing them to disclose to regulators where they report their income around the world.
"It’s a matter of justice and fairness that multinational companies pay their fair contribution" to national budgets, German Finance Minister Wolfgang Schaeuble told reporters ahead of the G20 meeting.