OECD tax reform a 'failure': Tax Justice Network
LONDON
The Organisation for Economic Cooperation and Development (OECD) has failed in its efforts to reform the international tax system despite several deals in recent years, the Tax Justice Network said yesterday, calling for the United Nations to take over responsibility.
The OECD, a club dominated by rich nations, has helped set global tax rules for decades and has been working to reform them given rampant abuse by multinational firms.
In 2021, in talks led by the OECD, agreement was reached on a minimum tax rate of 15 percent on multinationals and to develop rules on how to tax multinationals so countries do not lose out by profit shifting.
But implementation of the minimum rate and development of the tax rules have been slow.
"No significant reductions have been made in the amount of tax countries lose to global tax abuse since the start of the OECD's efforts to reform global tax 10 years ago," said the Tax Justice Network.
The NGO said that several studies, including one by the IMF, conclude that the OECD's draft proposals will make little to no impact on the scale of tax losses.
The Tax Justice Network estimated that if countries follow the course they have for the past decade, they will lose $4.7 trillion over the next 10 years.
For comparison, the NGO says the 2007-2009 Great Recession was estimated to have led to a loss of $2 trillion in global economic growth.
The Tax Justice Network said many of the OECD's proposals are serious and in line with its own.
"However, in all cases these policies have been rendered largely toothless under the pervasive influence of some OECD members who are also among the world's biggest tax havens.”
The NGO estimated that OECD nations are responsible for 77 percent of the $472 billion in tax losses countries suffer each year.
Higher income countries suffer most of the losses, but the figure is less than a tenth of their public health budgets, while for lower income nations it represents 56 percent.
That is one of the reasons why the Tax Justice Network believes the United Nations would be a better forum to reform global tax rules.
