Tackling global tax avoidance

New tax rules aimed at making global firms pay corporation tax bills in the jurisdiction they ‘do business’, have been published by the Organisation for Economic Co-operation and Development (OECD).

The proposals would scrap the century-old tax rules, and provide governments with the power to tax the big technology companies, such as Apple, Facebook and Google, who have been accused of mass tax avoidance.

The new OECD proposal, which is now open to a public consultation, would re-allocate some profits and corresponding taxing rights to countries and jurisdictions where multinational enterprises have their markets. The OECD said that it would ensure the MNEs conducting significant business in places where they do not have a physical presence are taxed, through the creation of new rules stating (1) where tax should be paid and (2) on what portion of profits they should be taxed.

OCED secretary-general, Angel Gurria, said: “We’re making real progress to address the tax challenges arising from digitalization of the economy, and to continue advancing toward a consensus-based solution to overhaul the rules-based international system by 2020.”