An action plan by a multi-lateral organisation.
It sounds like a contradiction in terms. Nonetheless that is what the Organisation for Economic Co-operation and Development has produced. It shows why tax as a corporate responsibility issue is not going away.
The report is full of actions, or rather proposed actions, that are aimed not just as governments but companies. Businesses thinking about a responsible approach to tax need to wake up and smell the coffee (Fair Trade or otherwise).
The action plan’s full title is Action Plan on Base Erosion and Profit Shifting. It might equally well be called Action Plan to Get Rid of Tax Practices Most People Think Aren’t Fair.
They lay it all out fair and square in the introduction.
Wham! “There is a need …[for] instruments that prevent double non-taxation … and that address cases of no or low taxation associated with practices that artificially segregate taxable income from the activities that generate it.”
Ouch!
Bam! “…the involvement of third countries … puts a strain on the existing rules, in particular when done via shell companies that have little or no substance in terms of office space, tangible assets and employees.”
Yikes!
Ker-pow! “The actions implemented to counter Base Erosion Profit Shifting (BEPS) cannot succeed without further transparency…”
Transparency? Surely not more transparency? Please, you’ll be talking the mandatory reporting of tax payments country-by-country next.
You are going to be?
Blast!
Yes, in fact this OECD document has all sorts of radical proposals between its grey, gery covers.
Over my next few blogs I will fillet the report, serve up some of the juiciest bits and explain what it means for companies interested in a responsible approach to tax.
Note: The OECD Report proposes a plan of 15 actions, all of which are to be concluded by 2015. For more on Corporate Citizenship’s views on tax see our paper Tax as a Corporate Responsibility Issue