By Matt Thompson Law360 (February 14, 2020, 6:01 PM EST)

The extra revenue that would result from the Organization for Economic Cooperation and Development's proposed overhaul of the global tax system is so low that it makes the undertaking pointless, a tax justice group said recently.

The Independent Commission for the Reform of International Corporate Taxation was responding to the OECD's preliminary analysis, released Thursday, of the tax that countries would gain from carrying out its proposals. The OECD's work is proceeding under two pillars, the first devoted to reallocating more taxing rights to countries where companies have customers but lack a taxable presence under current rules. The second pillar includes a global minimum tax.

The proposals would deliver only minimal redistribution of taxing rights among jurisdictions, and the "distributive implications" of the OECD's current proposal are problematic, the group said. High-income countries are expected to benefit more than middle- and low-income countries, according to the group.

The OECD estimated the proposals would raise an additional $100 billion globally. A study released by the U.K.'s Saïd Business School last week said any extra revenue generated might be canceled out by the cost of extra administration. The tax justice group seemed to share that concern, saying the OECD's proposals "would introduce even greater complexity" into the existing tax system.

In creating the new global tax rules, the OECD must facilitate negotiation among nearly 140 jurisdictions, members of what is called the inclusive framework, that have signed up to shape the reforms and implement them.

Global Alliance for Tax Justice, which campaigns for more equitable treatment for developing countries in tax matters, was also critical of the OECD, which has historically been seen as a rich countries' club.

“Having been built on top of the tax practices within the imperial trading blocs of the 1920s, the international tax system has historically been against developing country interests," the organization said through its social media channels Thursday. "The direction of current reforms in the OECD ... will only end up reinforcing this status quo.” The OECD didn't immediately respond to a request to comment.

https://www.law360.com/tax-authority/articles/1244160/tax-justice-group-calls-oecd-s-proposed-tax-revamp-pointless