Member Article

OECD support small business in tax debate

The OECD have entered the corporate tax debate, saying global solutions are needed to make sure tax systems do not unduly favour large multinationals.

A study commissioned by the G-20 found that some multinationals are paying as little as 5% tax, while their smaller contemporaries are paying up to 30%.

Angel Gurría, OECD Secretary-General, said: “These strategies, though technically legal, erode the tax base of many countries and threaten the stability of the international tax system.

“As governments and their citizens are struggling to make ends meet, it is critical that all tax payers - private and corporate - pay their fair amount of taxes and trust the international tax system is transparent.

“This report is an important step towards ensuring that global tax rules are equitable, and responds to the call that the G-20 has made for the OECD to help provide solutions to the global economic crisis.”

The report suggests many existing rules which protect multinationals from paying double taxation often allow them to pay no taxes at all.

Some smaller jurisdictions were shown to be acting as conduits, receiving disproportionately large amounts of Foreign Direct Investment compared to large industrialised countries and investing disproportionately large amounts in major developed and emerging economies.

Richard Woolhouse, CBI Head of Tax & Fiscal Policy, said: “In some cases the last time business tax rules were updated was in the 60s and 70s, reflecting an era of national-based firms.

“That’s why the tax system needs to be updated for the global and digital age. The UK must continue to work together with other countries through the OECD to update these rules, particularly on transfer pricing and intangibles, such as intellectual property.”

This was posted in Bdaily's Members' News section by Tom Keighley .