Daily Management Review

Oxfam: Not all loopholes in global tax system are closed


Agreements on global corporate tax reform will not prevent the world's largest companies from seeking opportunities to take profits abroad, CNBC writes, citing expert estimates.

The Organisation for Economic Co-operation and Development (OECD) has drafted the tax reform, and the changes would impose a minimum corporate tax rate of 15 per cent. The G20 countries also have already backed the plans, intending to push international corporations to pay fair taxes in the countries where they operate.
But there may be new ways for companies to avoid paying taxes, according to Christian Hallum, a tax policy specialist at Oxfam. He says the OECD system "exacerbates the existing inequalities" that characterise the current system, which is already grossly unfair.
The expert noted that not all details of the deal are yet known, but from the available evidence it would be bad news for tax havens such as Bermuda or the Cayman Islands. In its current form, however, the OECD's draft could result in activity shifting to other countries that can provide tax relief. The 15 per cent corporate tax would not apply everywhere, there are exceptions in the draft, Hallum explained.
There is a clause in the OECD agreement that allows companies to pay less than 15 per cent in countries where they have many employees or physical assets, such as factories. "The incentive to take profits out has not disappeared with the 15 per cent corporate tax floor," Hallum observed.
source: cnbc.com