OECD deal to fight corporate tax avoidance

OECD Mexican Secretary-General Angel Gurria signing a print of the G20-Turkey family photo at the G20 summit on Nov 15, 2015.
OECD Mexican Secretary-General Angel Gurria signing a print of the G20-Turkey family photo at the G20 summit on Nov 15, 2015. PHOTO: AFP

Over 30 nations ink pact to share data; firms will have to report earnings, taxes paid on country-by-country basis

PARIS • Over 30 countries from the Organisation for Economic Cooperation and Development (OECD) have signed a deal to share information about multinationals, in a push to boost transparency following public anger over big corporations playing the system to lower their tax bills.

Under the new rules, multinationals will have to report, country by country, how much they make and what they pay in taxes.

The deal signed on Wednesday is aimed at stopping firms from using complicated loopholes or moving money across borders to minimise or avoid paying corporate tax.

OECD head Angel Gurria said the agreement was a move towards "the goal of ensuring that companies pay their fair share of tax".

"Country-by-country reporting will have an immediate impact in boosting international cooperation on tax issues, by enhancing the transparency of multinational enterprises' operations," he said.

The exchange of information will start next year and give tax administrations "a single, global picture" on the activities of big businesses.

Australia, Britain, Chile, France, Japan, Luxembourg, Mexico and Switzerland were among the 31 signatories. The United States had yet to sign up to the accord but would do so in the near future, the OECD said.

The proposals are part of a 15-point OECD package agreed by leaders at a Group of 20 summit in Antalya, Turkey, last November.

The OECD calculates that national governments lose US$100 billion (S$143 billion) to US$240 billion, or 4 per cent to 10 per cent, of global tax revenues every year because of the tax-minimising schemes of multinationals such as Apple, Facebook and Amazon.

Google agreed last Friday to pay £130 million (S$265 million) in back taxes to Britain after a scathing government inquiry into the search giant's tax arrangements.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on January 29, 2016, with the headline 'OECD deal to fight corporate tax avoidance'. Print Edition | Subscribe