Eurodad response to OECD consultation on international tax rules
Together with members and allies from across Europe, Eurodad has submitted a response to the OECD consultation on the secretariat’s proposal for new international rules to determine the way taxing rights are allocated between countries. The submission, which can be found in full here, among other things highlights that:
The signatories welcome the growing recognition of the shortcomings of the transfer pricing system and the arm’s length principle. Furthermore, the signatories welcome the growing recognition of the value of taxing multinational corporations on the basis of their global consolidated profits, with taxing rights being allocated between governments based on an agreed formula and supplemented by a minimum effective tax rate.
However, as it stands, the signatories consider the OECD Secretariat’s proposal a missed opportunity to address the fundamental flaws in the international tax system. The signatories have a number of specific concerns with the OECD secretariat’s proposal, including the fact that the new system for allocation of taxing rights would supplement, rather than replace the existing transfer pricing system. This would leave a number of the problems with the current system unresolved, and at the same time increase the complexity of the international tax system. Furthermore, there are concerns that the method for allocation of taxing rights would be of little benefit, as well as potential harm, to low-income countries.
The signatories also raise concerns about the fact that a proposal put forward by a group of developing countries has not been given proper consideration, and that the negotiation of the new global tax rules continue to take place in a forum that does not allow all countries to participate on an equal footing.