MOSCOW: The finance ministers of Britain, France and Germany on Saturday launched a new drive to force big business to pay its fair share of tax and halt the schemes of top firms to keep payments to a minimum.
Britain's George Osborne, France's Pierre Moscovici and Germany's Wolfgang Schaeuble said it was time for internationally-coordinated action to clamp down on the practice of shifting profits from the company's home country to pay less tax under another jurisdiction.
The drive -- which is backed by a study by the Organisation for Cooperation and Economic Development (OECD) on the consequences of the so-called profit shifting -- comes as cash-strapped governments try to use every means to inject new funds into their budgets.
"We are talking about something that is fundamentally legal. We need to modify the law," admitted the OECD secretary general Angel Gurria. "Avoiding double taxation has become a way of having double non-taxation."
"No single country can go by itself," he said at a news conference on the sidelines of the G20 finance ministers' meeting in Moscow, insisting that the drive was not aimed at "bashing" individual corporate giants.
Schaeuble said it was "unfair that multinational companies should be able to use globalisation as a tool" not to pay their fair share of taxes while Moscovici described the issue as a "matter of fairness for our citizens".
Osborne said that current global tax rules had been developed almost 100 years ago -- along principles set out by the League of Nations in the 1920s -- and few changes had been made since.
"This means that the tax system does not reflect how international companies do business."
"We want businesses to pay the taxes that we set in our countries. And this cannot be achieved by one country alone. No one country can create an international tax system by itself."
According to the OECD, some multinational companies use strategies that allow them to pay just five per cent in corporate taxes while smaller businesses are paying 30 per cent.
It says that practices have become more aggressive in the past decade, with some multinationals creating offshore subsidiaries or shell companies and taking advantage of the tax breaks offered in the countries where these are registered.
- AFP/ck
EU states want 'fair tax share' from big business
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EU states want 'fair tax share' from big business
