[KYOTO] More than 80 countries and jurisdictions gathered in Kyoto on Thursday to push for global efforts to stop harmful corporate tax avoidance, the Organisation for Economic Cooperation and Development (OECD) said on Thursday.
The meeting follows a G20 agreement last year to endorse steps drawn up by the OECD to tackle tax avoidance in the wake of media reports on the tax structuring used by companies including Starbucks and Google that had sparked public anger.
It marked the latest step in the OECD/G20 project to tackle so-called Base Erosion and Profit Shifting (BEPS), which has allowed companies to move profits out of the countries where money is earned and into jurisdictions that do not tax them.
The BEPS project provides solutions for governments to close the gaps in existing international rules that allow corporate profits to be shifted to low or no tax environments, where companies have little or no economic activity, the OECD said.
Thirty five countries and jurisdictions, including Hong Kong and Singapore, have formally joined the new inclusive framework on BEPS, bringing to 81 the number of countries and jurisdictions participating on an equal footing in the project. "That's a major shift in international taxation," Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, told reporters after the gathering in Kyoto, in western Japan.
More than 20 other countries and jurisdictions participating in the Kyoto meeting, the first expanded gathering on the OECD project, are likely to join the inclusive framework in the coming months, he said.
The 35-member OECD put a conservative estimate of the amount of untaxed money moved by companies into tax havens at US$100 billion to US$240 billion annually, suggesting tens of billions of dollars of lost tax revenue.
Given developing countries' greater reliance on corporate income tax revenues, the impact of tax avoidance on these countries is particularly damaging, it said.
The OECD's Committee on Fiscal Affairs earlier on Thursday agreed on three objective criteria for blacklisting and penalising uncooperative tax havens. The OECD will report the criteria to G20 finance leaders gathering next month in China, Masatsugu Asakawa, Japanese vice finance minister for international affairs, who chairs the committee, told reporters.