The Guardian reported that a senior U.S. Treasury official blasted Britain for hampering progress on international efforts to stop tax avoidance by multinational companies. An international agreement related to taxation is expected to be published at a G20 summit this fall.
Now, multinational corporations shift their profits to countries with lower taxes. The new agreement would make countries liable to the tax rate in the home country of the parent company, with a credit for foreign taxes paid, which would reduce incentives to shift stated profits low-tax jurisdictions.
Robert Stack, a senior U.S. treasury official, vented frustration at Britain’s tactics to undermine efforts to establish standards that would prevent companies from moving profits across borders to avoid taxes. Stack said that negotiations on preventing tax avoidance are a “collective failure” due, in part, to the British government and prime minister David Cameron’s actions.
Calls for tax reform have been raised by nonprofit organizations and labor unions. Last month, a panel convened to demand that world leaders become more assertive in efforts to stop tax dodging by multinational corporations.
Joseph Stiglitz, a Nobel Prize-winning economist, who sat on the panel, argued, “Multinational corporations act and therefore should be taxed as single and unified firms,” as quoted in the Wall Street Journal.
