Nations discuss corporate tax avoidance at OECD meeting in Kyoto
Representatives of more than 80 countries and jurisdictions met in Kyoto on Thursday for a two-day conference aimed at going after corporate tax avoidance in the first-ever effort of its kind to include developed and developing countries.
The meeting of the Organization for Economic Cooperation and Development’s Committee on Fiscal Affairs takes place at a time of increasing calls to crack down on the use of offshore havens for corporate tax avoidance.
The OECD estimates annual revenue losses of $100 billion to $240 billion due to these activities, known as “base erosion and profit shifting” or BEPS.
“Until recently, international tax issues were only discussed by experts in the field. Today, as a result of the economic crisis, LuxLeaks, the Panama Papers and other scandals, these issues are being discussed by the man on the street, not at the level of the technicalities but as a basic issue of fairness,” said Masatsugu Asakawa, chair of the OECD Committee on Fiscal Affairs, in his opening remarks.
One of the problems that has traditionally prevented cooperation between developed and developing countries, which often rely on the money they get as tax havens, is that taxation has been seen as a sovereignty issue, said Finance Minister Taro Aso.
“The BEPS project changed the traditional practice of international taxation discussion, which had long been driven by developed countries,” Aso said. He added that developed and developing countries were on equal footing in the discussions to reach an agreement on closing tax loopholes.
During the Kyoto meeting, discussions will focus on ensuring that participating countries implement four minimum standards arising from the project, including those on harmful tax practices, tax treaty abuse, country-by-country reporting and dispute resolution mechanisms. Countries that fail to comply could be blacklisted as early as next year.
Currently, 82 countries and jurisdictions are officially participating in the BEPS project. These include 46 OECD and Group of 20 members and 36 new members, including Hong Kong, Singapore and over a dozen African nations. The remainder were considering whether to join in the coming months.