A 5-point plan to stop big corporations cheating poor countries out of billions of dollars in tax revenue, was published by Oxfam today in the wake of the Mauritius Leaks.
When multinational corporations and the super-rich use tax havens to dodge paying their fair share, it is ordinary people, and especially the poorest, who pay the price. The Mauritius Leaks show that tax havens continue not only to exist but to prosper, despite government promises to rein in tax dodging. Oxfam’s plan lists five steps governments can take to tackle tax avoidance and end the era of tax havens.
Susana Ruiz, Oxfam International’s tax advisor, said:
“Politicians could put a stop to tax scandals if they wanted to. Oxfam has listed 5 concrete solutions that would prevent another Mauritius Leaks scandal and ensure multinational corporations pay their fair share of tax wherever they do business. Developing countries can revise or void their tax treaties and introduce withholding taxes to better protect their tax revenue, and all governments – rich and poor – agree to set a global minimum effective tax rate on corporate profits.
“There is no time to waste. Developing countries lose an estimated $100 billion a year in tax revenue as a result of tax dodging by multinational corporations, and even more as a result of damaging tax competition between countries. This money is desperately needed to end hunger, tackle the climate crisis, and ensure all children have the chance of an education.”
Oxfam’s 5-point plan to build a fairer global tax system calls on governments to:
(1) Agree new global tax rules in the negotiations led by the OECD under the mandate of the G20 to ensure fair taxation of big corporations. This should include the introduction of a global minimum effective tax rate set at an ambitious level and applied at a country-by-country basis without exception. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens out of business.
(2) Developing countries should not give away their taxing rights. Many treaties result in multinational companies not paying certain types of tax at all in any country. Rich countries have a responsibility in ensuring fair taxation with their investments and the projects they finance. Governments of developing countries can protect their tax base from erosion by revising or voiding their tax treaties, introducing withholding taxes and implementing strong tax anti-abuse rules.
(3) End corporate tax secrecy by ensuring all multinational companies publish financial reports for every country where they operate. The current OECD initiative on country-by-country reporting falls well short of the mark as it does not cover all multinational corporations and it does not require companies to make their financial reports publicly available. This means poor countries are unable to access the information to identify tax cheats. Stronger European proposals on public country-by-country reporting were due to be agreed this year but are being blocked by EU member states such as Germany, Ireland, and Luxembourg.
(4) Agree a global blacklist of tax havens based on comprehensive objective criteria and take strong countermeasures including sanctions to limit their use. Governments have yet to agree an objective global list of tax havens. A farcical OECD-G20 blacklist published in July 2017 features only Trinidad and Tobago. The more comprehensive European Union list omits European tax havens such as the Netherlands and Ireland.
(5) Strengthen global tax governance by creating a global tax body where all countries can work together on an equal footing to ensure the tax system works for everyone. The new round of global tax negotiations (BEPS 2.0) is a historic opportunity to put a stop to damaging tax competition and corporate tax avoidance, and to build a fairer tax system that works for the benefit of all people and not just a fortunate few. Even if the new round of global tax negotiations (BEPS 2.0) delivers positive results, a more inclusive tax body is required to oversee the global governance of international tax matters and strengthen international tax cooperation.
Notes to editors:
Download Oxfam's 5-point plan here.
Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/