What the BEPS are we talking about?
Bloomberg’s “The Great Corporate Tax Dodge”, The New York Times’ “But Nobody Pays That” and the Guardian’s “Tax Gap”: these are some examples of the wide media attention given to global tax issues in recent weeks. The public is understandably becoming alarmed, since what is at issue is how profit shifting by multinationals is eroding their national tax bases. OECD initiatives on tax policy can help.
A rising tide may not now lift all boats, to misquote US President Kennedy’s original analogy made in 1963 linking economic growth to prosperity for all. Can governments maintain the social cohesion needed for sustainable, long-term growth? Supporting an equitable income distribution remains one of the key goals of fiscal (and tax) policy.(1451 words)
Social media is being exploited by advertisers, politicians and headhunters. Government tax offices are also weighing in.
Have you ever followed a tax official on Twitter, or “liked” your tax office’s Facebook page? From the US to New Zealand, tax authorities are raising their social media profiles by providing advice on filling out tax forms, sharing information on budget changes, promoting e-tax forms and, of course, with reminders of payment deadlines.(728 words)
One area where governments have been looking to raise revenues is green taxes. And with good reason. Taxes can provide a clear incentive to reduce environmental damage. But while the number of environmentally-related taxes has actually been increasing in recent years, revenues from these taxes have been on a slight downward trend in relation to GDP. The decline in revenue partly reflects the drop in demand for fuel in response to recent high oil prices and other factors, which in turn has led to a reduction in total revenues from taxes on energy products.(160 words)
When the G20 decided to get tough on tax evasion, several decades of OECD work suddenly became even more relevant than before. The growing determination to tackle evasion is helping to restore trust in tax systems and close off avenues for illegal activities.(1191 words)
In 2008 a US senate subcommittee issued a report alleging that banks located in tax havens cost US taxpayers some $100 billion a year in lost revenue. That is a considerable leakage, especially in light of US laws, institutions and other mechanisms to help control tax evasion.(1270 words)
The financial crisis might not have been caused by taxation, but it nonetheless raises concerns about evasion, compliance and transparency in financial markets. The OECD Observer asked South Africa's minister of finance, Pravin Gordhan, who chairs the OECD's Forum on Tax Administration, to explain.(534 words)
How to get it right
Austerity programmes to restore order to public finances can add to the woes of already struggling economies, leading to more job losses and social hardship. But there are ways for governments to put their fiscal houses in order, while supporting growth and reducing income inequality at the same time.
The economic ills of the crisis have rightly prompted public reevaluation of government spending habits and revenue collection on both sides of the Atlantic. While congressional super committees and EU delegations hash out plans to foot massive debt bills, a combination of civil society groups, the Occupy movement, and simple common sense have brought long-deserved attention to certain tax loopholes and corporate practices that cost governments billions of dollars.(762 words)
Emblazoned on the front of the Internal Revenue Service building in Washington DC is a quote from American poet, author and judge, Oliver Wendell Holmes: “Taxes are what we pay for a civilized society ” It is the potential to inspire better governance through raising revenue that matters to civil society, and everyone has a role to play. To act as responsible corporate citizens, companies must pay the right amount of tax and be transparent about it. Yet Christian Aid estimates that developing countries lose as much as $160 billion–greater than the global aid budget–to companies dodging tax.(657 words)
A lot of debate about tax and developing countries nowadays tends to focus on how to reduce revenue leakage through offshore tax havens. But there is another hot issue called transfer pricing which developing countries have to be mindful of, particularly if they want to avoid the risk of losing out on tax revenue from cross-border transactions carried out by multinational enterprises. How does it work?(1800 words)
Since 2008, unemployment in the OECD area has leapt from 6.1% to 8.2% in 2011. Governments searching for ways to increase employment must at the same time deal with the large budget deficits that are also a legacy of the crisis. Tax reform can play a role in this balancing act.(1046 words)
When the OECD joined the G20 crackdown on tax havens during the economic crisis in 2009, its longstanding work helped to curb this harmful tax practice and implement a global standard of bank transparency. Now the organisation is focusing on another time-honoured malpractice: that of slipping taxable income through fiscal loopholes. Some call this creative accounting, the OECD calls it aggressive tax planning, and because it is hurting government revenue, it is hurting entire economies as well.(389 words)
Like the OECD, VAT has also been around for about 50 years. Is it time to reform some of the older, more unwieldy versions and go for a trimmer, broad-base, standard-rate VAT system instead?(2397 words)
The recent financial crisis has left a hole in the public finances of many countries. Yet, with the right preparation, governments may have been better placed to fund that gap. This holds lessons for future crisis resolution strategies.(1944 words)
Child poverty warning; Economy; Soundbites; Slower development aid?; Japan rebuilds; Tax burden on the rise; Estonia joins the OECD; Shinier steel outlook; Cities under-served by carbon markets; Brazil and India sign OECD chemical accord; Corruption: governments warned; Plus ça change...(1520 words)
What has changed in the decade since former OECD experts Flip de Kam and Chiara Bronchi wrote one of this magazine’s most downloaded articles, “The income taxes people really pay”. There have been a few changes, though the need to look behind headline tax rates remains as true as ever.(2117 words)
Spring is finally in the air for most OECD countries, as the signs of recovery start to multiply. The recession has been long and hard, so this is reassuring news. But while the worst of the crisis may be behind us, the recovery remains fragile, and there are still many policy challenges to address.(843 words)
In February 2009, Singapore and Hong Kong, China, undertook to bring tax transparency up to international standards and relax bank secrecy laws for tax purposes. Hot on the heels of these announcements were others from the Cayman Islands, Jersey, Andorra and Liechtenstein, and more recently we have seen Austria, Belgium, Luxembourg and Switzerland signing up to the OECD standard on exchange of information.(790 words)
Denmark is confirmed as the OECD’s highest-tax country, followed by Sweden, while Mexico and Turkey remain the lowest-taxing countries, the latest 2008 edition of Revenue Statistics says. Denmark’s tax-to-GDP ratio stood at 48.9% in 2007, while Turkey’s was at 23.7% of GDP.(213 words)
The OECD’s campaign against harmful tax competition garnered a higher profile at the start of 2008 with disclosures concerning widespread tax evasion by Germans and others through Liechtenstein. The revelations drew wide media attention in Germany and beyond, and have prompted fresh resolve in many OECD countries to fight tax evasion via offshore havens. In fact, investigations have been launched in over a dozen countries since then, including Australia, Canada, France, Germany, Italy, New Zealand, Spain, Sweden, the UK and the US.(719 words)
Real estate is an important strategic sector in most economies–just think of the links to construction or the importance of property in the investment portfolios of pension funds. But it is also vulnerable to abuse for money laundering and tax fraud.(1099 words)
How do your taxes and social benefits differ from your peers in other countries and what is the effect on your income? How much income do unemployed people get in different countries? The new OECD online taxbenefit calculator may have the answer. Our experts have taken all those complex legal rules about who is entitled to what benefit and who should pay how much tax in different countries and put them into a simple tax-benefit calculator so that you can decide yourself which comparisons you would like to make.(194 words)
Globalisation brings costs and benefits, even for the tax professional. The move towards a borderless world has opened up new opportunities for taxpayers to minimise their overall tax liabilities. Much of this tax planning is legitimate. Good tax planning is driven by the reality of businesses having to operate with increasingly complex laws, particularly affecting international activities, while at the same time wanting to legally minimise their costs, including tax costs.(1195 words)
Fiscal responsibility is no longer a taboo in Latin America. Just look at Mexico. Once a country with burgeoning budget deficits, it is now a stable global economic player. But this OECD member is not the only example. New governments have been elected in Brazil and Chile, each promising fiscal rectitude.(1193 words)
Who owes what, how and where? Understanding the international array of tax treaties can be a headache for businesses everywhere, not to mention tax authorities. There are 2,500 such treaties in force around the world, covering everything from income tax to pension plan liabilities. No one, be they companies or governments or individuals, likes to be short-changed, which makes global tax such a sensitive issue.(356 words)
Where are we in the current economic crisis?