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OECD making it impossible for developing nations to access tax information

25 June 2015 - Sorley McCaughey

Greater transparency in the financial reporting of big multinationals has long been viewed as essential in tackling tax dodging.

Knowing what a company does on a country by country basis- in other words knowing what they do in each jurisdiction in which it operates will allow citizens, the media, tax authorities to use the information to identify possible instances of aggressive tax avoidance, or even evidence of corruption.

Developing countries, which lose most to tax dodging by multinationals would benefit hugely from the availability of this information.

Give tax dodgers no where to hide

 

But despite assurances to the contrary, the OECD (Organization for Economic Cooperation and Development) – who are leading the reform of the international corporation tax system – has made it nearly impossible for developing countries will not be able to benefit from accessing this information.

In a statement by the OECD Head of Tax Policy, Pascal Saint Amans, which was also covered in the Irish Times at the beginning of June, it was made clear that the OECD intend that the data be shared first with the host country of the parent company. It will then only be disbursed on the basis of existing bilateral tax agreements or other bureaucratic mechanisms with other countries.

However, most developing countries do not have these kinds of arrangements in place with the countries in which these multinationals are likely to be headquartered, making it impossible for them to access the information.

OECD tax mandate

What makes it worse, is that the OECD has of late been falling over backwards to be seen to be trying to accommodate the needs and concerns of developing countries. After all, that is what they were mandated to do by the G20, after the Lough Erne Summit in 2013.

The OECD was tasked with creating a reporting standard for multinationals that would be of use to the tax authorities of developing countries (not only developing countries, but definitely including developing countries). This clearly hasn’t happened.

Developing countries will not be access to the kind of information that would be so valuable in tackling tax dodging. The countries that stand to benefit are those with all the necessary tax treaties and arrangements already in place – i.e. OECD countries.

Intergovernmental body on tax

I guess one shouldn’t be surprised that the OECD is looking after the interests of its membership first. But it makes the calls for an intergovernmental body on taxation under the UN all the more timely.

Christian Aid will be calling for the establishment of such a body when it attends the Financing for Development Conference in Addis Ababa this July. We will be pushing the Irish government to support our call, something to which to date they have been resisting.

With every new utterance from the OECD, however, these calls will be more and more difficult to ignore.

 

 

 

 

About the author

Sorley McCaughey

Sorley McCaughey is Christian Aid Ireland's Head of Advocacy and Policy.

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