The OECD campaign to stamp out corporate tax dodging will fail, charities warn

OECD Secretary General Jose Angel Gurria (C) and Administrator of the United Nations Development Programme Helen Clark (R) listen to a speech of French Minister of Environment and Energy Segolene Royal during the OECD forum in Paris, 02 June 2015.

The OECD will present its economic outlook on Wednesday, bringing the first response to an international campaign to stamp out corporate tax dodging.

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.

Nevertheless, a coalition of 10 charities and human rights bodies is insisting that the campaign will fail and that G20 leading economies should instead adopt a global minimum tax rate for multinationals.

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.

Also on Wednesday (3 June) and Thursday, politicians will hold the annual ministerial meeting of the Organisation for Economic Co-operation and Development (OECD) to talk about economic growth.

Ministers will also discuss how to finance the fight against climate change and “transformation towards a low-carbon economy”.

The OECD has been trying to find common ground on rules that would restrict the support given to fossil fuel plants and extraction. It wants a deal before the climate summit in Paris at the end of the year, during which the world will try to sign an international treaty on greenhouse emissions.