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OECD: Global firms need new tax rules | OECD: Global firms need new tax rules |
(about 5 hours later) | |
Moves to tackle corporate tax avoidance on a global scale have been unveiled by the Organisation for Economic Co-operation and Development (OECD). | Moves to tackle corporate tax avoidance on a global scale have been unveiled by the Organisation for Economic Co-operation and Development (OECD). |
The action plan is aimed at multinational companies that shrink their tax bills by shifting their profits from one country to another. | The action plan is aimed at multinational companies that shrink their tax bills by shifting their profits from one country to another. |
Firms including Starbucks, Amazon and Google have been accused of pursuing such strategies. | Firms including Starbucks, Amazon and Google have been accused of pursuing such strategies. |
They have all said they operate within the law. | They have all said they operate within the law. |
Change the rules | |
The OECD says 44 nations making up 90% of the world economy favour its plan. | The OECD says 44 nations making up 90% of the world economy favour its plan. |
Announcing the proposals, the OECD's head of tax, Pascal Saint-Amans, told journalists in Paris that they would "change the rules of the game" by making sure companies paid taxes in the country where profits were generated. | Announcing the proposals, the OECD's head of tax, Pascal Saint-Amans, told journalists in Paris that they would "change the rules of the game" by making sure companies paid taxes in the country where profits were generated. |
At present, firms can exploit agreements intended to avoid double taxation of profits by using them to obtain double tax deductions instead. | At present, firms can exploit agreements intended to avoid double taxation of profits by using them to obtain double tax deductions instead. |
They also use internal billing procedures to ensure that profits are registered in countries where corporate tax levels are lower. | They also use internal billing procedures to ensure that profits are registered in countries where corporate tax levels are lower. |
Under the OECD plan, a country-by-country model would require firms to declare their revenue, profit, staffing and tax paid in each jurisdiction. | Under the OECD plan, a country-by-country model would require firms to declare their revenue, profit, staffing and tax paid in each jurisdiction. |
Big impact | |
The measures will go before finance ministers at the next meeting of G20 nations in Australia this weekend. | The measures will go before finance ministers at the next meeting of G20 nations in Australia this weekend. |
Richard Collier, tax partner at PwC said the changes would have a big impact on global firms. | |
"The scale and scope of change surpasses what many people had anticipated at the outset. | |
"The big worry for businesses is that different tax authorities will require different information, which could add to the administrative and cost burden for businesses." | |
Anton Hume, at accountants BDO, said the measures could result in companies moving away from tax havens: "It may mean that a lot of activities are onshored again." |