Loved the article. It's astonishing how large, multinational corporations, like Apple, Starbucks, Wal-Mart etc., move around their money, to take advantage of the lowest taxes possible. It doesn't affect them at all, & actually, their tax managers are rewarded further for helping the corporation & its investors save taxes. But, then these same corporations pay meagre wages to their employees (who then need social services, which are paid by taxes), & take advantage of other social services or infrastructure, paid for by the taxes.
Since, somebody gotta pick up the tab for all those social services & government expenses, & rich individuals dodge the taxes through offshore banking & corporations dodge the taxes through effective use of transfer pricing, the poor of the country gets the bills of the nation.
I'd call this "corruption". These corporations are all tout the horn of "ethics" but then find the first loophole in the law to dodge their fair responsibility. Ironically, when it's done in developing countries, it's called "corruption" & when it's done in developed countries, it's called "effective & efficient use of the law."
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The international corporate tax system is outdated, unfair & will continue to cost developing countries tens of billions of dollars in lost revenues each year unless it is completely overhauled, a coalition of charities & civil society organisations has warned.
In a report ..., the Independent Commission for the Reform of International Corporate Taxation (Icrict), which was initiated by the charities & other organisations, argues that globalisation has rendered the century-old global tax system obsolete as more & more companies trade within related corporate structures.
“Tax abuse by multinational corporations increases the tax burden on other taxpayers, violates the corporations’ civic obligations, robs developed & developing countries of critical resources to fight poverty & fund public services, exacerbates income inequality, & increases developing country reliance on foreign assistance,” says the report.
On a more basic level, it adds, the tax policies of one country can have a dire effect on other countries’ ability to raise taxes that could be spent on education, healthcare & safe roads.
The report calls for the abolition of the separate entity principle, arguing that it allows huge multinational companies to dodge their tax obligations by presenting their operations in different countries as completely independent of one another. The principle permits them to shift their profits to countries with low or zero tax rates – & to move their losses into countries where taxes are higher.
“The primary enabler of international corporate tax abuse is the separate entity principle – a legal fiction that enables the flow of vast amounts of taxable income away from the underlying business operations,” it says.
“We believe the only effective way to stop this abuse is to treat multinational corporations as single & unified firms & divide the taxable profits between the countries where the income generating activities are located. If multinational corporations were taxed as single & unified firms, there would be no transfer pricing because global corporate profits would be consolidated, & thus no profits would be gained or lost through intra-company transactions.”
The report ... also calls for rich countries to agree a minimum corporate tax rate to stop “the global race to the bottom”.
“While each country is responsible for its own tax system, no country is unaffected by the tax system of others,” it says. “In addition to evaluation of the effectiveness of tax preferences, countries should also examine spillovers caused by their tax preferences for multinational corporations.”
Toby Quantrill, principal economic justice adviser at Christian Aid – which is part of the Icrict coalition – said drastic action was required when it came to retooling the international tax system.
“These ideas will be seen by many as radical,” he said. “Such changes will not be easy to implement & will not happen overnight. But as many people know, acknowledging the reality & severity of a problem can be the first step to recovery.”
Quantrill said that although the Organisation for Economic Cooperation & Development (OECD) had launched a plan to tackle multinational tax dodging, it was focusing on the symptoms rather than the causes.
“As a number of reports & analyses are showing, its work so far will be limited in its impact in richer countries & simply will not deal with the fundamental problem for poor countries,” he said.
“As an organisation often described as a ‘rich countries club’, it is hardly surprising that the OECD has not prioritised the problems faced by the poorest countries. And let’s be clear, these problems are significant.”
A recent report by the UN Conference on Trade & Development estimated that profit-shifting by multinational companies costs developing countries $100 billion a year in lost corporate income tax. Another report, by IMF researchers, estimated that developing countries may be losing as much as $213 billion a year to tax avoidance.
Oxfam – which published its own report on tax avoidance ... – says that corporate tax avoidance in the form of trade mispricing by G7-based companies & investors cost Africa $6 billion in 2010 alone. According to the NGO, the sum is more than 3 times the amount needed to improve the healthcare systems in the Ebola-affected countries of Sierra Leone, Liberia, Guinea & at-risk Guinea Bissau.
Oxfam & others are calling for the British government to introduce a tax-dodging bill that would oblige UK companies to pay tax in the countries where they operate – & would also make it harder for big companies to avoid paying tax in the UK.
“Multinational companies, many with headquarters in the UK & other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare & send their children to school,” said Nick Bryer, Oxfam’s head of UK campaigns.
“To fund the fight against poverty & to tackle worsening extreme inequality, we need action to ensure big companies pay their fair share, here & in the world’s poorest nations.”
Since, somebody gotta pick up the tab for all those social services & government expenses, & rich individuals dodge the taxes through offshore banking & corporations dodge the taxes through effective use of transfer pricing, the poor of the country gets the bills of the nation.
I'd call this "corruption". These corporations are all tout the horn of "ethics" but then find the first loophole in the law to dodge their fair responsibility. Ironically, when it's done in developing countries, it's called "corruption" & when it's done in developed countries, it's called "effective & efficient use of the law."
---------------------------------------------------------------------------------
The international corporate tax system is outdated, unfair & will continue to cost developing countries tens of billions of dollars in lost revenues each year unless it is completely overhauled, a coalition of charities & civil society organisations has warned.
In a report ..., the Independent Commission for the Reform of International Corporate Taxation (Icrict), which was initiated by the charities & other organisations, argues that globalisation has rendered the century-old global tax system obsolete as more & more companies trade within related corporate structures.
“Tax abuse by multinational corporations increases the tax burden on other taxpayers, violates the corporations’ civic obligations, robs developed & developing countries of critical resources to fight poverty & fund public services, exacerbates income inequality, & increases developing country reliance on foreign assistance,” says the report.
On a more basic level, it adds, the tax policies of one country can have a dire effect on other countries’ ability to raise taxes that could be spent on education, healthcare & safe roads.
The report calls for the abolition of the separate entity principle, arguing that it allows huge multinational companies to dodge their tax obligations by presenting their operations in different countries as completely independent of one another. The principle permits them to shift their profits to countries with low or zero tax rates – & to move their losses into countries where taxes are higher.
“The primary enabler of international corporate tax abuse is the separate entity principle – a legal fiction that enables the flow of vast amounts of taxable income away from the underlying business operations,” it says.
“We believe the only effective way to stop this abuse is to treat multinational corporations as single & unified firms & divide the taxable profits between the countries where the income generating activities are located. If multinational corporations were taxed as single & unified firms, there would be no transfer pricing because global corporate profits would be consolidated, & thus no profits would be gained or lost through intra-company transactions.”
The report ... also calls for rich countries to agree a minimum corporate tax rate to stop “the global race to the bottom”.
“While each country is responsible for its own tax system, no country is unaffected by the tax system of others,” it says. “In addition to evaluation of the effectiveness of tax preferences, countries should also examine spillovers caused by their tax preferences for multinational corporations.”
Toby Quantrill, principal economic justice adviser at Christian Aid – which is part of the Icrict coalition – said drastic action was required when it came to retooling the international tax system.
“These ideas will be seen by many as radical,” he said. “Such changes will not be easy to implement & will not happen overnight. But as many people know, acknowledging the reality & severity of a problem can be the first step to recovery.”
Quantrill said that although the Organisation for Economic Cooperation & Development (OECD) had launched a plan to tackle multinational tax dodging, it was focusing on the symptoms rather than the causes.
“As a number of reports & analyses are showing, its work so far will be limited in its impact in richer countries & simply will not deal with the fundamental problem for poor countries,” he said.
“As an organisation often described as a ‘rich countries club’, it is hardly surprising that the OECD has not prioritised the problems faced by the poorest countries. And let’s be clear, these problems are significant.”
A recent report by the UN Conference on Trade & Development estimated that profit-shifting by multinational companies costs developing countries $100 billion a year in lost corporate income tax. Another report, by IMF researchers, estimated that developing countries may be losing as much as $213 billion a year to tax avoidance.
Oxfam – which published its own report on tax avoidance ... – says that corporate tax avoidance in the form of trade mispricing by G7-based companies & investors cost Africa $6 billion in 2010 alone. According to the NGO, the sum is more than 3 times the amount needed to improve the healthcare systems in the Ebola-affected countries of Sierra Leone, Liberia, Guinea & at-risk Guinea Bissau.
Oxfam & others are calling for the British government to introduce a tax-dodging bill that would oblige UK companies to pay tax in the countries where they operate – & would also make it harder for big companies to avoid paying tax in the UK.
“Multinational companies, many with headquarters in the UK & other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare & send their children to school,” said Nick Bryer, Oxfam’s head of UK campaigns.
“To fund the fight against poverty & to tackle worsening extreme inequality, we need action to ensure big companies pay their fair share, here & in the world’s poorest nations.”
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