ICRICT tightens noose on multinationals’ tax evasion
February 13, 2018
By Adeola Yusuf
The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has tightened the noose on tax evasion and avoidance by multinationals. The group, which announced in a statement, said that it was pleased to announce that Thomas Piketty and Gabriel Zucman have accepted to join the Commission.
These distinguished economists, the ICRICT said, would bring talent and unique expertise to the table. In particular, the Commission will benefit from Thomas Piketty and Gabriel Zucman’s perspective on inequality, income and wealth distribution, the statement added.
The report entitled: “A Roadmap To Improve Rules For Taxing Multinationals,” said that three months ago, the Paradise Papers had prompted again the citizens’ indignation against the way multinational corporations avoid paying their fair share of taxation.
“ICRICT is launching today a new publication presenting concrete solutions to reorient the existing system of international taxation away from serving the wealthy few and to focus it instead on addressing the needs of the vast majority of the population,” said the statement. “After evaluating many alternatives, ICRICT proposes a solution to a failing system.
Global formulary apportionment, coupled with a minimum corporate tax rate, is the only effective way for all countries to collect a fair share of tax revenue from multinational enterprises and avert a race to the bottom.” Multinationals are groups of entities that are under single management control and have a single set of owners, and should therefore be taxed as unitary firms José Antonio Ocampo, Chair of ICRICT, said: “Tax avoidance is about human rights. It is about people who are denied access to the services they need to lift themselves out of poverty because of tax avoidance.
If large firms, including multinationals, and rich individuals don’t pay their fair share of taxes, it means no money for education, health care, infrastructure and fighting climate change. It is clear for everybody now we cannot count on foreign aid to address these questions.
“The critical issue is where the value is created, and how difficult it is to identify this as we move into a more complex global economy. We believe our proposal is the fairest one, and particularly the only one that answers the needs of both developed and developing countries.” “The existing system of international taxation has been exploited by multinationals. They even threaten their governments not to bring back any economic activity unless they implement a corporate tax they agree with. Tax avoidance and the push to governments to reduce corporate taxes are effectively preventing sustainable development.”
“Not all countries have a seat at the table in the process OECD started three years ago to stop tax avoidance. The OECD should not be the only body where these discussions should take place. The international community has already created a body, the United Nations, to address global issues of common concern, and tax avoidance falls under this mission.”