MNCs should be taxed on global basis, says tax reform coalition

The Times of India

Lubna Kably


MNCs should be taxed on global basis, says tax reform coalit ..

MUMBAI: In the wake of the recent Mauritius leaks, The Independent Commission for the Reform of International Corporate Taxation (ICRICT) suggests that multinational should be taxed on a global basis.

“The solution we have advocated within ICRICT is a global formula that would ensure that multinationals’ global profits - and hence the associated taxes - could be apportioned between countries according to objective factors. It is imperative that those should include not just sales, but also employment (at headcount, rather than at payroll level) to truly benefit low-income countries,” it adds.

The coalition also supports the proposal for a global introduction of a minimum corporate tax, as endorsed by the G7. Any multinational that books its profits in a tax haven could therefore be taxed in its home country, up to this minimum rate. This would reduce its interest in transferring its profits to tax havens and put a brake to the race to the bottom. “Nevertheless, it is essential that this is well designed, especially by setting a relatively high minimum rate, 20% or over. A global minimum effective rate of below 15% would only encourage a continued race to the bottom in corporate taxation,” it emphasises in its release.

Lastly, ICRICT points out that the failure to force all tax havens to establish public registers of beneficial ownership of companies, trusts and foundations, allows the tax haven industry to keep on flourishing. In this backdrop it advocates introduction and adoption of a ‘Global Asset Registry’ which would lead to transparency.