By Vivienne Russell | 2 May 2014
International efforts to tackle corporate tax dodging need a radical overhaul so that developing countries are involved and can benefit, Oxfam said today.
It criticised the G20’s plan, devised by the Organisation for Economic Cooperation and Development, for leaving developing nations out of negotiations, despite the fact that the world’s poorest countries were often hit hardest by corporate tax avoidance.
The charity’s Business among friends report cited a forthcoming study by tax expert Alex Cobham and economist Petr Jansky, which will suggest that, if multinational companies are taxed in countries where real economic activity takes place, corporate tax revenues in some developing countries could more than double.
Their analysis of US multinational activity and profits has found that a more progressive corporate tax regime would boost the corporate tax base in the Philippines by 75%, in Ecuador by 99%, in South Africa by 106% and in India by 180%.
Winnie Byanyima, Oxfam’s international executive director, said: ‘Corporations are rigging the rules and taking advantage of poor countries, fuelling a vicious cycle of inequality. Developing countries are being locked out of negotiations, creating a risk that any revisions to the rules will only serve the interests of the wealthiest and most powerful.’
Oxfam argued non-G20 nations should be allowed to participate in international negotiations to reform the corporate tax regime and should not be excluded because of a perceived lack of capacity.
Instead, wealthier nations should support developing countries by passing on the knowledge and capacity necessary to collect taxes that are owed, while governments should begin to talk seriously about creating a World Tax Authority to ensure fair and equitable tax systems across the globe.
‘If done properly, the OECD action plan presents a unique opportunity to overhaul international corporate tax rules to the benefit of all economies,’ said Byanyima.
‘This opportunity is too rare and important to be squandered.’
