PARIS – Stashing profits offshore may soon get tougher for companies, thanks to an ambitious plan released Friday by the finance chiefs of leading world economies aimed at forcing multinationals to pay more taxes.
Low tax payments by major global companies – including Google, Amazon, Facebook and Starbucks – have sparked public anger in Europe recently, as governments are struggling with high debts, low growth and austerity measures that are hitting ordinary taxpayers.
“National tax laws have not kept pace with the globalization of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes,” the Organization for Economic Cooperation and Development said in a statement Friday announcing the new tax plan. It was unveiled at a meeting of the Group of 20 finance ministers in Moscow.
The Paris-based OECD says the new 15-point plan includes ways to close loopholes and allow countries to tax profits held in offshore subsidiaries. If it is adopted, the measures would be implemented over the next two years and target such practices as deducting the same expense more than once, in more than one country.
The plan also has a special focus on the digital economy, where commerce flows across borders constantly and it’s harder to tie revenue and profit to a single country.
G20 finance officials are also looking at giving countries a score of 1 to 4 depending on how cooperative they are with other governments on tax evasion, tax fraud and money laundering.
The plan’s designers insist it isn’t anti-business, and is in part aimed at making things more consistent for companies and governments.
Russian Finance Minister Anton Siluanov, the host of Friday’s G20 meetings, said it’s aimed at allowing “multinational corporations to prosper without loading a higher tax burden on domestic companies and individual taxpayers.”
The OECD has been at the forefront of efforts to tackle tax evasion, especially since the global financial meltdown five years ago. But repeated pledges at G20 meetings have not always lived up to their promise, and companies around the world continue to turn regularly to tax havens.
The problem has gained urgency as European governments, struggling with exceptionally tight budgets, become more determined to recover any revenue they can from rich companies seen as avoiding fair taxes.