adminThe G20 group of emerging and advanced nations had asked the Organisation for Economic Co-operation and Development to come up with the action plan after agreeing earlier this year to make a priority out of cracking down on tax avoidance.
The OECD said that governments needed to work to bring their tax regulation systems into greater harmony to prevent big investors parking huge sums in tax havens to avoid significant taxation.
“New international standards must be designed to ensure the coherence of corporate income taxation at the international level,” the OECD said.
It said a proper rule system was needed as the current framework was “consensus-based” and risked being entirely undermined, especially as the digital economy becomes ever more important.
“A bold move by policy makers is necessary to prevent worsening problems,” said the OECD. Finance ministers and central bank chiefs of G20 states meet in Moscow last week and Saturday with hopes of making a strong and unified statement on tax avoidance in their final communique.
Actions proposed by the OECD including requiring taxpayers to disclose their aggressive tax planning arrangements to the fiscal authorities but also making dispute resolution mechanisms more effective.
Companies in the spotlight in the last months for using these legal, but controversial, methods of booking profits in low-tax countries include US giants Google, Amazon and Starbucks.
The action plan should provide countries with domestic and international instruments that will better align the right to tax with economic activity, the OECD said.
“Fundamental changes are needed to effectively prevent double non-taxation,” it said. “Moreover, governments must continue to work together to tackle harmful tax practices and aggressive tax planning.”
Tax avoidance is one of the top themes being discussed during the Russian G20 presidency this year, which will culminate in a summit in Saint Petersburg in September. – AFP.
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