As the OECD finalizes BEPS, questions linger on who will have access to the information
October 5th, 2015
October 5th, 2015
The Organization for Economic Cooperation and Development (OECD) has released its Base Erosion and Profit Shifting (BEPS) project outcomes in an effort to cut down on tax avoidance by multinational corporations (MNCs), but because vital information from the new reporting effort won’t be made public, questions linger on what good it will do for developing countries that are seeing some of the worst effects of profit shifting.
The BEPS project, spearheaded by the G20 in an attempt to curtail tax avoidance by multinational corporations (MNCs), would require MNCs to report on their profits, taxes paid, and other financial information on a country-by-country basis. Currently, corporations can submit bundled financial reports for their operations around the globe, making it impossible to know where the economic activity actually occurred. But the OECD and G20 have resisted sustained calls to make these reports public.
“Thanks to investigations like LuxLeaks, we’ve had a window into what sorts of secret deals are being drawn up between tax haven governments and some of the world’s largest corporations,” said Porter McConnell of the Financial Transparency Coalition. “But it took a leak to make that happen, which only strengthens the case to make these country-by-country reports available to the public.”
The BEPS project purports to tackle inequities in the global tax system, but it was devised and written by the OECD, a group of 34 of the world’s wealthiest nations. While the OECD’s Director of Tax Policy recently claimed that all countries would now be able to participate in BEPS ‘on equal footing’, this proclamation comes after the system’s structure had already been put in place.
“Though developing countries have long been asking for a seat at the drafting table when pen was being put to paper, it seems like the OECD would rather invite them into the process once the ink is dry,” said Oriana Suarez of the Latin American Network on Debt, Development, and Rights.
“Just last week, World Bank President Jim Yong Kim called tax avoidance a form of corruption, adding that it affects the world’s poor the most,” said Suarez. “So why shouldn’t governments of developing countries, who represent those most adversely affected, be a part of designing the solution?”
Although the rules are already set to be endorsed by G20 leaders at their summit next month, big questions remain about which governments will ultimately be able to obtain country-by-country reports, since they will be filed with a multination’s home country government.
“Multinationals will file these reports with their home country governments, most of the time within the OECD,” added McConnell. “But the governments of developing countries, where many MNCs have extensive operations, won’t have access to the information, thus making it all that much harder for them to tackle the growing problem of tax dodging.”
Christian Freymeyer, Financial Transparency Coalition
Omar Olivares, Latindadd