The Organization for Economic Cooperation and Development (OECD) has released its first set of recommendations for a coordinated international approach to combat tax avoidance by multinational enterprises, under the OECD/G20 Base Erosion and Profit Shifting Project.
The Paris-based organisation is recommending a single set of international tax rules that all countries would adopt to end the erosion of tax bases and the artificial shifting of profits to jurisdictions to avoid paying tax.
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The OECD has detailed its recommendations in seven areas, including rules to prevent the abuse of international tax treaties, country-by-country reporting of revenues, profits, taxes paid for multinationals, and measures to deal with transfer pricing.
Presenting the recommendations, OECD secretary-general Angel Gurria said: "Our recommendations constitute the building blocks for an internationally agreed and co-ordinated response to corporate tax planning strategies that exploit the gaps and loopholes of the current system to artificially shift profits to locations where they are subject to more favourable tax treatment."
The recommendations will be a key item on the agenda when G20 finance ministers next convene at a meeting hosted by Australia’s Finance Minister Joe Hockey on September 20-21 in Cairns, Australia.
The proposed measures were agreed after a consultation process between OECD, G20 and developing countries and stakeholders from business, labour, academia and civil society organisations.
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By GlobalData
