IMF says that companies could pay nearly 14% more under global tax deal

IMF says that companies could pay nearly 14% more under global tax deal
The IMF Board of Governors meeting gets underway in 2017. Stephen Jaffe/IMF

Profit shifting is the whole idea of MNCs reporting profit to places with relatively less or no tax, a practice that, according to The Organisation for Economic Co-operation and Development (OECD), costs governments US$100-US$240 billion in lost tax revenue every year. So the IMF has struck a pact with 141 countries to put in a base tax rate of 15%, something that the IMF says will lead to companies paying collectively an extra 14% more in corporate income tax. But while this is all good and well, every member country actually has to enforce this pact for it to work.

Key comments:

“Business operates internationally, so governments must act together to tackle BEPS and restore trust in domestic and international tax systems. BEPS practices cost countries 100-240 billion USD in lost revenue annually, which is the equivalent to 4-10% of the global corporate income tax revenue. Working together in the OECD/G20 Inclusive Framework on BEPS, 141 countries and jurisdictions are implementing 15 Actions to tackle tax avoidance, improve the coherence of international tax rules, ensure a more transparent tax environment and address the tax challenges arising from the digitalisation of the economy,” said the OECD.

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