Aligning tax and business
An OECD initiative to crack down on tax avoidance will have a major impact on global companies.
COMPANIES with cross-border operations need to urgently re-examine their tax practices to prepare for radical changes to international tax laws. The Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) project was launched as a response to the growing perception that governments are losing substantial tax revenue to tax planning. This view has been exacerbated by intense attention on such tax avoidance issues in recent years.
A number of multinational corporations (MNCs) have been subject to intense scrutiny by policymakers such as the UK Public Accounts Committee (2012), the US Senate and, most recently, the European Commission.
Earlier this year, for instance, the Commission criticised tax agreements between Apple and the Irish government, saying the deals were improperly designed to give the tech giant a financial boost in exchange for jobs in the country. Efforts to crack down on corporate tax-avoidance come as governments struggle to boost revenue and cut deficits. Tax avoidance and evasion in the European Union (EU) cost about one trillion euros (S$1.62 trillion) a year, according to the Commission.
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