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Michel
Gabrysiak
President of the Finance Foundation

OECD, G20 and 60 governments are starting a war on global tax avoidance. Good luck to all !!!
October 12, 2015 , Michel Gabrysiak - Financial Markets
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            Tax avoidance -to be polite- or tax cheating -to be matter of fact- is a very well known activity. Governments, tax authorities, are looking for those who cheat and try to force them to pay. That is a very old sport. 

            But there is a new shape and form of tax avoidance today. Globalisation of the largest corporations on the planet, between 500 and 1000 companies, is adding a totally new dimension to that activity, which I find the traces in Mesopotamia 2500 years BC. They were already avoiding.

            If you read the newspapers or look at television feeds three or four names are quoted all the time. Google, Apple, Amazon, Starbucks. But they are not alone; again, many hundreds of big international companies do the same. They put their companies in low level tax countries or no taxes countries. This allows them not to pay taxes absolutely legally. They commit no crime in accordance to the laws of the country where they declare their existence. 

OECD decided to do something about it. So did the G20. In other words, the big countries vs the big companies. The result is that OECD considers that a change in tax regulations would bring 250 billion dollars of tax revenue to the countries where the companies exist in reality i.e. Europe, USA, Japan.

            60 countries have participated in this tax avoidance exercise and want new rules for taxing profits. OECD is implementing the BEPS or Base Erosion and Profit Shifting. This BEPS will improve transparency and try to find the endless list of loopholes in its own taxation system.        

            The word which comes out of this huge effort is transparency. The new rules of transparency are going to be implemented, which will force companies to give more details on where and how they make money. This, in turn, will allow tax authorities to know better what happens and apply tax systems wherever necessary. 

            It is an extremely difficult exercise. All kinds of lobbies, bodies, legal advisors are already jumping and saying “No, no, no”.

In order to succeed, the exercise needs one ingredient: the participation of public opinion, the agreement for a more “equal” tax system for all. All being here the citizen, the small and medium size businesses and the giant business companies of this planet. A recent example is extremely to the point: Apple announced some weeks ago that it had 100+ billion dollars hoarded in a tax haven in full legality. Apple was asking the question “How shall I use that money?”. I don’t know if they found a way. But there is no doubt that OECD has opened a gigantic Pandora box. The USA, Europe, Japan, the OECD, governments and the citizens have to play a role. 

            Good luck to all. 

 

 

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