Tag: rich countries - Page 2

In response to the OECD’s tax deal announced today, Oxfam’s Tax Policy Lead Susana Ruiz said: “Today’s tax deal was meant to end tax havens for good. Instead it was written by them.”

“This deal is a shameful and dangerous capitulation to the low-tax model of nations like Ireland. It is a mockery of fairness that robs pandemic-ravaged developing countries of badly needed revenue for hospitals and teachers and better jobs. The world is experiencing the largest increase in poverty in decades and a massive explosion in inequality but this deal will do little or nothing to halt either. Instead, it is already being seen by some wealthy nations as an excuse to cut domestic corporate tax rates, risking a new race to the bottom.

“Calling this deal ‘historic’ is hypocritical and does not hold up to even the most minor scrutiny. The tax devil is in the details, including a complex web of exemptions that could let big offenders like Amazon off the hook. At the last minute a colossal 10-year grace period was slapped onto the global corporate tax of 15 percent, and additional loopholes leave it with practically no teeth.

“This deal is an unacceptable injustice. It needs a complete overhaul. The OECD and the G20 must bring fairness and ambition back to the table and deliver a tax plan that won’t leave the rest of the world to pick up their crumbs and scraps.”

Notes to editor

140 countries have been negotiating the two-pillar tax framework under the OECD-G20 umbrella. The first ‘pillar’ aims to make the world’s largest corporations pay more taxes in the country where they earn profits. Based on current proposals, Oxfam estimates that it will affect only 69 multinationals and would only apply on ‘super profits’ above 10 percent. Loopholes could let the likes of Amazon and ‘onshore’ secrecy jurisdictions like the City of London off the hook. Extractives and regulated financial services are excluded from the deal.

New analysis by Oxfam estimates that 52 developing countries would receive around 0.025 percent of their collective GDP in additional annual tax revenue from the ‘Pillar One’ proposal endorsed today.

The second ‘pillar’ seeks a global minimum corporate tax rate. The OECD tax plan dropped “at least” from a proposed minimum global corporate tax rate of “at least 15 percent” and further delayed its full implementation from the previously planned 5 years to 10 years.

The 15 percent rate is well below the UN Financial Accountability, Transparency and Integrity (FACTI) Panel recommendation made earlier this year, which called for a 20- to 30-percent global corporate tax on profits. The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has called for a 25 percent global minimum tax to be applied. 

A 25 percent global minimum corporate tax rate would raise nearly $17 billion more for the world’s 38 poorest countries (for which data is available) than a 15 percent rate. These countries are home to 38.6 percent of the world’s population.

Developing countries are more heavily reliant on corporate tax. In 2018, African countries raised 19 percent of their overall revenue from corporate tax, compared to just 10 percent for OECD nations.

Today, European economic and finance ministers met to approve an update to the EU’s list of tax havens. This comes in the midst of the unfolding Pandora papers scandal and global tax negotiations.

In response, Chiara Putaturo, Oxfam’s EU Tax expert, said:

“The EU blacklist should penalise tax havens. Instead, it lets them off the hook. Today’s decision to delist Anguilla, the only remaining jurisdiction with a zero per cent tax rate, and the Seychelles, which are at the heart of the latest tax scandal, renders the EU’s blacklist a joke. While the Pandora Papers investigation blew the lid on how the super-rich continue to use tax havens to avoid paying their taxes, ordinary people are asked to foot the Covid-19 recovery bill.

“The EU is shutting its eyes to real tax havens while considering blacklisting poor countries who do not sign up to the imminent global tax agreement. This deal is unfair as it benefits rich countries and ignores the needs of poor countries. Instead of using the blacklist as a tool to force poor countries into accepting an unfair tax deal, the EU should reform the list’s criteria to target real tax havens.

“In the next months, European governments have the opportunity to reform the EU’s blacklist. They must blacklist zero per cent and very low tax jurisdictions, set up indicators to detect where companies have fake economic activity and require transparency of their real owner. The reform must make the blacklist fit for purpose. Otherwise, the list will remain a whitewashing tool which allows the wealthiest and the most profitable companies to continue escaping their fair share of taxes.”

Notes to editor

Today, European governments published a revised list of blacklisted countries. The list removed Anguilla, Dominica and Seychelles from the blacklist.
EU countries and the European Commission are currently revising the criteria of the EU blacklist. This should be finalised in early 2022.
In a new media briefing, Oxfam explains why the current list does not capture real tax havens, why it is unfair and what should be changed.
An agreement on global tax reforms (BEPS2) negotiated by OECD Inclusive Framework countries is likely to be endorsed by G20 leaders at the end of October. This package contains two pillars. Pillar 1 introduces the right to tax big multinationals based on where they make their sales. Pillar 2 establishes a global minimum corporate tax rate of 15%. Countries must endorse both pillars as one package. In the next days, Oxfam will publish a new analysis with evidence of the unfairness of the OECD proposal.
In the Communication on Business Taxation for the 21st century, the European Commission announced plans to introduce future criteria requiring the endorsement of the global tax reforms.
On Sunday, the International Consortium of Investigative Journalists (ICIJ) published the Pandora Papers investigation which showed how wealthy individuals use tax havens to hide their fortune or to escape taxes. Almost none of the countries identified as secret jurisdictions features in the EU blacklist. Seychelles was one of the most mentioned jurisdictions and was delisted from the EU’s blacklist today. Introducing a criterion of the list to make sure that the person who owns or controls the company (beneficial owner) is disclosed can increase transparency and help capture some of these jurisdictions. European governments have been considering introducing this type of measure for many years. They are now waiting for the overall reform of the criteria to introduce this measure.