ICRICT Letter: OECD’s lobbying points to failure on fair corporate taxation

From Joseph Stiglitz and Jayati Ghosh

© Dan Breckwoldt/Dreamstime Letter: OECD’s lobbying points to failure on fair corporate taxation on twitter (opens in a new window)

We wish to congratulate the FT for exposing the duplicity of the OECD (“OECD lobbied to weaken tax plans”, Report, July 8). The article deftly explains how the organisation pressured the Australian government to weaken critical transparency requirements for multinational corporate taxation.

The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has long been concerned about the OECD’s central role in recent efforts to make multinationals pay their fair share of taxes. We grew especially worried in 2021 after the OECD released their anaemic proposals, which are expected to provide minuscule sums to developing countries and emerging markets in return for holding off imposing digital and other taxes on multinationals. These taxes are critical for raising badly needed revenues in coming decades.

The OECD has designed reforms tilted in favour of its members — advanced countries — and the corporations in them. There’s a distinct possibility that the allegedly minimum standards set in the agreements will turn out to be the de facto standards. If so, a reform effort intended to raise revenues may actually have the opposite effect. The reported attempts of the OECD in Australia to actively undermine efforts to increase transparency confirms we were right to worry.

Given the situation, ICRICT urges developing countries and emerging markets to, first, think carefully before signing on to the multilateral convention to implement what is known as amount A of pillar one of the October 2021 G20-OECD inclusive framework agreement, which prohibits digital taxation and other measures needed to enhance tax revenues. Second, they should support efforts to kick-start a new round of negotiations at the UN, as called for by the African Group at the UN and following the adoption last autumn of the general assembly’s resolution to scale up international tax co-operation, fight illicit financial flows and combat aggressive tax avoidance and evasion. Joseph Stiglitz Co-Chair, ICRICT, Professor, Columbia Business School, Columbia University, New York, US Jayati Ghosh Co-Chair, ICRICT, Professor, Department of Economics, University of Massachusetts, Amherst, MA, US

https://www.ft.com/content/fed78c75-1da8-4a1a-8cfc-219e99fe246c