Report: better tax rules could boost developing country corporate tax revenues by 100%

A new report from Oxfam, entitled BUSINESS AMONG FRIENDS: Why corporate tax dodgers are not yet losing sleep over global tax reform.

It begins like this:

“Tax dodging by big corporations deprives governments of billions of dollars. This drives rapidly increasing inequality. Recent G20 and OECD moves to clamp down on corporate tax dodging are a first step, but these have woken up a legion of opponents set on undermining them.

Most developing countries, which lose billions to corporate tax dodging annually, are also being left out of the decision making. Commercial interests must not be allowed to pursue their agenda at the cost of the public interest. All developing countries must be included in negotiations, and corporations must pay what they owe.”

The attached press release notes:

“According to new figures from a forthcoming study by tax expert Alex Cobham and economist Petr Janský, if multinationals were taxed in countries where real economic activity takes place, then corporate tax revenues in some developing countries could increase by more than 100%.”

Interestingly, the basis for the calculation is described:

“The figures used by Oxfam represent the preliminary findings of the forthcoming study: Cobham, A. & P. Janský, 2014, ‘Misalignment between US multinational activity and profits, and the potential development impact of formulary apportionment’.
. . .
The results show the implication for the distribution of the corporate tax base resulting from US-headquartered multinationals if profits were distributed according to economic activity.”

Formularly apportionment is a central component of unitary taxation, which TJN has recently played a leading role in endorsing, and is engaged in a research project to explore.

Plus two more wonderful Oxfam graphics, which are worth sharing widely.