Blueprints published by the OECD today1 on how it plans to tackle tax havens do not come close to the reforms needed, the Tax Justice Network has warned. An estimated $500 billion in corporate tax is lost to tax havens every year under current international rules, and the costs of the worldwide COVID-19 pandemic make recapturing these an urgent priority. The OECD’s blueprints, which also lack political agreement to proceed, have drawn harsh criticism from leading economists and tax experts.2
Commenting on the blueprints, Alex Cobham, chief executive at the Tax Justice Network, said:
“The OECD has once again shown that it is incapable of delivering the urgent tax reforms the world needs. Countries are losing hundreds of billions in tax to tax havens ever year, and yet the OECD’s blueprints offer little more than a “tax haven lite” model where tax havens can keep the majority of profit they syphon from around the world so long as they share some of those profit with the richest of countries.”
“Global corporate tax abuse is particularly harmful to lower income countries, where tax is most critically needed and where losses to corporate tax abuse make up the largest share of current tax revenues. But the OECD’s own analysis of its proposals shows that high-income countries would gain just as much, meaning that high income countries benefit disproportionately compared to others.
“The ‘pillar one’ reforms are highly complex but would only reverse a few billion dollars’ worth of the global revenue losses – and almost nothing would go to lower-income countries. The ‘pillar two’ reforms would introduce a minimum corporate tax rate that is welcome in principle, but as formulated would only empower high-income countries that are the headquarters for most multinational corporations.
“The silver lining is that the OECD process has made clear that there is a global consensus for an effective minimum tax, and for a shift towards taxing multinationals based on where they employ staff, run offices and factories and sell goods and services – instead of where they park trademarks and rent mailboxes.3 But with the OECD demonstrating today that it cannot lead a genuinely inclusive global process to achieve these aims, countries must take progressive, unilateral actions while moving forwards together to establish a UN process to deliver the tax reforms the world urgently needs.”
-ENDS-
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Notes to editor:
- The OECD’s published blueprints are available here.
- World leading experts Joseph Stiglitz, Eva Joly, Jayati Ghosh and other ICRICT commissioners have criticised the OECD’s blueprints in a statement published this morning, “ICRICT: the OECD has not delivered. The world needs an answer now, not further delays”
- For more information on unitary tax, view this infographic.