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OECD tries to curb tax avoidance by multinationals

If at first you don’t succeed: a major international economic development organisation is trying once more to curb tax avoidance on a multinational level.

The Organisation for Economic Co-operation and Development, a think tank based out of Paris, announced recently that it has plans to draw up new tax avoidance rules in order to stop or at least hopefully discourage the practice amongst the world’s biggest multinational companies. The OECD has big plans for the new guidelines to be read for the July G20 summit, and says that all 34 members of the think tank are on board to eliminate loopholes and legal schemes that allow these multinationals to make shedloads of cash and not pay their fair share of taxes; to that end Ángel Gurría, secretary general for the OECD, remarked that commitment was ‘widespread’ to draft a series of tax rules that would permit a country to actually collect what these businesses owe the governments of the countries they do business within.

The problem facing the OECD and legislators alike is that the current regime in the majority of countries – especially the G20 – is that there are a myriad of ways to avoid taxes in a completely legal manner, though the moral and ethical ramifications of doing so are rather rife. Of course the problem is that these fantastically lax tax rules attract big businesses who will typically improve national economies by employing large members of the local community despite the fact that they can – and do – reduce their tax burden.

Normally this isn’t much of a problem; after all these multinationals bring in all sorts of revenue second- and third-hand, even if they leave Her Majesty’s Revenue & Customs a bit short every year at tax time. Of course a problem arises whenever there’s an austerity, such as what’s happening right now in the global economic marketplace, and governments that are tightening their belts left and right look at the hundreds of millions or even billions being made by high-profile companies such as Google, Amazon, and Starbucks and wonder why they were so stupid to let their tax avoidance plans fly under the radar.

Meanwhile, businesses everywhere are going ‘well why are you all so cross at us? We’re just doing what you said we could!’ In a way you can’t blame firms for taking advantage of tax loopholes, as they’re greedy little bastards that would rub a pair of pennies together if you told them they would multiply for doing so.

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