World Economy

OECD Plan to Close Tax Loopholes

OECD Plan to Close Tax LoopholesOECD Plan to Close Tax Loopholes

In response to public anger over low tax bills for some of the world’s largest multinationals, the OECD has revealed a 15-point plan that aims to stop companies from exploiting different countries’ tax systems.

The world’s wealthiest nations unveiled proposals on Monday for overhauling the way big companies’ profits are taxed in an effort to combat tax avoidance, DW reported.

“Playtime is over,” said Pascal Saint-Amans, who oversaw the creation of the so-called Base Erosion and Profit Shifting plan.

The suggestions came nearly a year after it was revealed that more than 350 multinational corporations had negotiated surreptitious tax agreements with Luxembourg to get their tax rates down to as low as 1%, in what was known at the time as “LuxLeaks.”

The leaks stirred public anger over the way companies and banks had contrived to cheat national governments out of billions of dollars of potential tax revenue. They also drew attention to the antiquated rules that govern taxation of international commerce.

Monday’s announcement was the culmination of years of work by the Organization for Economic Cooperation and Development, the body that advises industrial nations on economic policy, into how to best close the loopholes that have allowed multinationals to shift profits and debt to subsidiaries in other countries in order to pay fewer taxes.

Technology giants such as Google, Apple and Amazon are widely seen as being particularly savvy at skirting taxes, but big names in other sectors–such as Pepsi, IKEA and Deutsche Bank–have been caught engaging in the same behavior.

The companies maintain they are acting in accordance with various countries’ laws. Those laws are what the OECD would like to see changed. It called for a multilateral agreement on new tax laws by 2016.