OECD - Report on tax base erosion, profit shifting by multinational entities 

February 12:  The Organisation for Economic Co-operation and Development (OECD) today announced the release of its study of tax systems and whether multinational enterprises are favored over private citizens and smaller businesses.

The OECD study—Addressing Base Erosion and Profit Shifting—was commissioned by the “G-20 countries” and includes the following findings:


  • Some multinationals use strategies that allow them to pay as little as 5% in corporate taxes when smaller businesses are paying up to 30%
  • Some “small jurisdictions” act as conduits, receiving disproportionately large amounts of foreign direct investment compared to large industrialized countries and investing disproportionately large amounts in major developed and emerging economies

According to today’s OECD announcement, the practices that some multinational enterprises use to reduce their tax liabilities have become more aggressive over the past decade. The OECD found that some entities, based in high-tax regimes, create numerous off-shore subsidiaries or shell-companies, each time taking advantage of the tax breaks allowed in that jurisdiction. They also claim expenses and losses in high-tax countries and declare profits in jurisdictions with a low or no tax rate.


The OECD report does not suggest optimal tax rates. The OECD is expected to draft an “action plan” to quantify the corporate taxes lost and provide concrete timelines and methodologies for solutions to reinforce the integrity of the global tax system.




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