Rights groups reject OECD approach on corporate tax avoidance

LONDON, June 2 (Reuters) – An international campaign to stamp out corporate tax dodging will fail and G20 leading economies should instead adopt a global minimum tax rate for multinationals, a coalition of 10 charities and human rights bodies said.

The G20 asked the Organisation for Economic Co-operation and Development in 2013 to devise reforms to the international tax system to stop companies shifting profits into tax havens.

The Independent Commission for the Reform of International Corporate Taxation, which is backed by charity Oxfam, the Council for Global Unions and the World Council of Churches, said OECD proposals did not go far enough in raising transparency or taking account of developing country needs.

But a central problem with the OECD proposals was that companies could continue to shift profits because the new proposals foresee companies’ subsidiaries continuing to be taxed as though they were independent of each other.

Nobel Prize-winning economist Joseph Stiglitz, who sits on the Commission, said this was a “legal fiction” and that companies should be taxed as a single group. Multinationals say this would be too complex and impractical.

Until such time as developed countries shift to a single group taxation model, they should adopt a global minimum tax rate for companies, Stiglitz said in a statement.

The OECD is due to unveil its final recommendations later in the year.