OECD has unveiled further proposals that aim to crack down on companies that avoid tax.
The package of 15 proposed reforms will be presented to G20 finance ministers later this week in Peru; it is the result of two years of work amid public anger at global companies that shift profits to lower tax jurisdictions.
The OECD’s Base Erosion and Profit Shifting (BEPS) project looks to tackle the tricks employed by multinationals to pay less tax, depriving countries of much-needed revenue.
The Paris-based body says global firms with annual revenues of more than €750m should report their activities on a country-by-country basis.
“The financial crisis was some form of weak up call and it was time to put an end to what we call tax heaven or to put an end to this tax avoidance. You know tax avoidance is legal,” Pascal Saint-Amans, the head of the OECD’s Centre for Tax Policy, told euronews in an interview.
“We are now coming up with a plan which has been agreed by 44 countries, all the G20, all the OECD countries, a number of developing countries have joined forces to change the legislation,” he added.
The OECD estimates that between four to 10 percent of global tax revenues are lost each year from profit shifting; that is equivalent to 100 billion to 240 billion dollars annually.
But critics say the OECD’s plans will only increase the complexity of global tax rules.
The European Network on Debt and Development said in a statement that “weak and unclear guidelines” on so-called ‘patent box’ regimes will lead to further tax scandals.
Such schemes charge companies a preferential rate of corporation tax to profits attributable to patents.
The OECD’s proposals are expected to be endorsed by G20 leaders when they meet in Antalya, Turkey on November 15 and 16.