Sir, – It was disappointing to read of the Government's take on new proposals from the OECD to tackle the enormous tax avoidance by multinational corporations ("Government warns EU against tougher tax rules", October 6th).
The OECD’s package to tackle base erosion and profit shifting (Beps), which the organisation estimates at €100 billion to €240 billion per year, was broadly welcomed by companies, corporate tax advisers and the Government, yet it fails to achieve two key objectives set for it by the G20 group of major economies. The G20 tasked the OECD with devising corporate tax reforms to ensure that multinationals pay their taxes “where economic activities take place and value is created”, while “ensuring that developing countries benefit from the process”. The Beps package fails on both counts.
Rather than removing controversial tax-avoidance tricks, such as tax-reduced “patent boxes” and secret tax rulings, this initiative actually lends legitimacy to their use. It also increases the “grey areas” in the corporate tax system, giving multinationals and their specialist tax advisers considerable scope to find new loopholes.
The OECD intends that its Beps package will establish the global corporate tax system for decades to come, but it lacks the mandate and impartiality to pursue such a task – this “reform package” it has delivered is heavily weighted towards OECD countries and multinationals over the taxing rights of developing countries.
Worse still, the package risks crowding out more ambitious proposals by the European Commission and European Parliament, which are keen to ensure fair burden-sharing among taxpayers and fair competition between businesses. That risk was evident in Minister for Finance Michael Noonan’s strong support for the voluntary, business-friendly measures proposed by the OECD over more ambitious and binding EU rules.
With the OECD effort having failed to deliver in vital areas of reform, we hope the EU will step up for its citizens and developing countries by tackling effectively the corporate tax avoidance that denies billions of euro to the public purse. Ensuring public country by country reporting of multinationals’ profits and taxes, as Beps has failed to do, would represent an important start. – Yours, etc,
EAMONN CASEY,
Policy Officer,
Debt and Development
Coalition Ireland, Dublin 7.