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Multinationals under OECD fire

Hardy GraupnerFebruary 12, 2013

The OECD has urged an overhaul of international corporate tax rules, accusing big multinational companies of being overly resourceful in reducing their tax burden. The report comes ahead of a G20 meeting in Moscow.

Starbucks cafe in London
Image: picture alliance / Sven Simon

Some multinationals were using strategies that allowed them to pay as little as five percent in corporate taxes, while smaller businesses were paying up to 30 percent, an OECD study confirmed on Tuesday.

The survey commissioned by the G20 group of industrialized and emerging economies even went as far as to say that many of the existing rules which protected multinational companies from double taxation sometimes even allowed them to pay no taxes at all.

These strategies, though technically legal, erode the tax base of many countries and threaten the stability of the international tax system, said the secretary-general of the Organization for Economic Cooperation and Development, Angel Gurria.

No time to waste

"As governments and their citizens are struggling to make ends meet, it is critical that all pay their fair amount of taxes and trust the international tax system is fair," Gurria added in a statement published on the OECD's homepage.

The organization said if that was not the case and multinationals were allowed to gain an unfair advantage over smaller businesses, investment, growth and employment were bound to suffer in the final analysis.

British and French lawmakers are already studying ways of overhauling the tax system after revelations about companies such as Starbucks, Apple or Google had used complex inter-company transactions to cut their annual tax bills. The OECD said it hoped for a multilateral convention that could replace the 3,000 bilateral systems in place right now.

"If there's political report to go in this direction, the two years would be good, but it shouldn't take more time," the OECD's director of tax policy, Pascal Saint Amans told reporters, according to the Reuters news agency.