If you’ve been reading our tax blog, you’ll remember that we posted about Apple Inc.’s tax controversy and drew your attention to a couple of the potential charges they were having to defend to the CRA. If you recall, the big issue was about their tax strategy and the way they were conducting certain parts of their business overseas in order to pay less tax.
They’re obviously not the only ones who saw an opportunity to save some money overseas and took it, but with Apple’s tax controversy bringing these multinationals into the spotlight, public anger has been brewing. Last week’s G20 Finance Ministers and Central Bank Governors’ meeting in Moscow responded to these companies by vowing to make it more difficult to spread their profits offshore.
Multinationals are forced to pay more taxes
Angela Charlton reported for Global News about the G20 meeting and put a special focus on ambiguous tax laws for online economy.
“Stashing profits offshore may soon get tougher for companies, thanks to an ambitious plan released Friday by the finance chiefs of leading world economies aimed at forcing multinationals to pay more taxes.
Low tax payments by major global companies — including Google, Amazon, Facebook and Starbucks — have sparked public anger in Europe recently, as governments are struggling with high debts, low growth and austerity measures that are hitting ordinary taxpayers.
‘National tax laws have not kept pace with the globalization of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes,’ the Organization for Economic Cooperation and Development said in announcing the new tax plan Friday. It was unveiled at a meeting of the Group of 20 finance ministers in Moscow.
The Paris-based OECD says that the new 15-point plan includes ways to close loopholes and allow countries to tax profits held in offshore subsidiaries. If it is adopted, the measures would be implemented over the next two years and target such practices as deducting the same expense more than once, in more than one country.
The plan also has a special focus on the online economy, where commerce flows across borders constantly and it’s harder to tie revenue and profit to a single country.
U.S. Treasury Secretary Jacob Lew hailed the plan as a ‘major step toward addressing tax avoidance by multinational firms.’ In a statement out of Washington, he said, ‘We must address the persistent issue of ‘stateless income,’ which undermines confidence in our tax system at all levels.’
The plan’s designers insist it isn’t anti-business, and is in part aimed at making things more consistent for companies and governments.” Read the entire Global article here.
If you’re interested in reading more about the G20 meeting, check out Finance Canada’s release!