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OECD unveils plans to crackdown on corporate tax avoidance OECD proposals target aggressive tax avoiders
(about 7 hours later)
The Organisation for Economic Co-operation and Development has unveiled new proposals to tackle tax avoidance by multinational companies such as Amazon and Google. The OECD has announced potentially ground-breaking new proposals to clamp down on aggressive tax avoidance by multinational corporations such as Amazon and Google.
The Paris-based body said the world’s biggest economies should impose a new “country-by-country” reporting regime on multinational firms to increase the transparency of their corporate activities and limit scope for them to shift profits offshore to avoid tax. The Paris-based Organisation for Economic Co-operation and Development unveiled an array of recommendations, including the demand that the world’s major economies impose a new “country-by-country” reporting regime on multinationals in order to increase the transparency of their corporate activities and limit the scope for them to shift profits offshore to avoid tax.
“The country-by-country reporting will provide a clear overview of where profits, sales, employees, and assets are located and where taxes are paid and accrued,” it said. “The country-by-country reporting will provide a clear overview of where profits, sales, employees and assets are located and where taxes are paid and accrued,” it said.
The OECD also said multinational rules should be devised to ensure compliance with the new regime by governments. The OECD also said a rule that allows a company to operate a warehouse within a country, without also registering a tax residence, should be reconsidered. This could potentially affect the online retailer Amazon, which reduces its tax bill by selling to the rest of Europe, including Britain, through a subsidiary in Luxembourg.
The proposals, which include a curb on firms artificially reducing their profits in a jurisdiction by abuse of “transfer pricing”, will be presented to G20 finance ministers in Australia later this week and go before the full leaders’ meeting  in November. The suite of proposals, which also includes a curb on businesses artificially channelling profits to tax havens through the abuse of “transfer pricing”, will be presented to G20 finance ministers in Australia later this week and will go before the full leaders’ meeting for approval in November. The new regime is scheduled to be finalised next year, when national governments will be tasked with enacting legislation to bring it into force.
In the UK, internet giants Google and Amazon have been lambasted by MPs for doing large amounts of business here but paying next to no tax on their profits. Tuesday's announcement was given a mixed reception by campaigners and tax experts. Richard Murphy of Tax Research UK described the new reporting proposals as “good news” and added: “No multinational corporation can argue ever again that it does not have this data or that it would be too costly to publish it.”
Also, in 2012 the coffee chain Starbucks agreed to pay  £20 million in corporation tax over  two years after being heavily criticised for paying just  £8.6 million during the previous  14 years to the British Exchequer. However, Sol Picciotto, a senior adviser to the Tax Justice Network, said most of the measures were “just tweaks” and that a wholesale restructuring of the global tax system was still necessary. “They’re trying to repair an old motorcar, but what they need is a new engine” he said.
It also emerged that the UK was among a group of four countries which blocked attempts to make the new regime tougher by clamping down on the poaching of tax revenues that flow from intellectual property (IP) assets. The Coalition has introduced a controversial “patent box” which offers a significant tax break to pharmaceutical companies and other that register their IP in the UK.