Osborne calls for addressing ‘profit shifting’ by multinational companies
18 Feb 2013
Chancellor George Osborne has in a call asked for the so-called "profit shifting" by multinational companies to be addressed as he unveiled the next steps in his fight for reform of global tax rules this weekend.
In bylined article, the chancellor saidin The Guardian, ''On Saturday, I was in Moscow at a meeting of G20 finance ministers, putting international tax avoidance on the agenda. Globalisation and technology have brought about huge changes in the way businesses operate. Communication is faster than ever. Finance is more mobile than ever. And the value of companies is increasingly tied up in concepts such as brand and intellectual property, which do not observe country borders.''
He said the principles of tax government for multinational companies not having changed much since they were developed by the League of Nations almost a century ago.
He added, as a result some large multinationals were able to restructure their business to avoid payment of their fair tax share. Some countries were exploiting the rules by getting profits out of high tax countries and into tax havens, allowing payment of as little as 5 per cent in corporate taxes while smaller businesses were paying up to 30 per cent, which distorted competition, giving larger companies an advantage over smaller domestic companies.
According to the chancellor, people were rightly asking for something to be done.
Meanwhile, G20 finance ministers have pledged to crack down on tax avoidance by multinational companies.
