IMF's new report on global corporate taxation is a ‘wake-up’ call but more action is needed
The International Monetary Fund (IMF) today publishes a major new report on global corporate taxation: “Spillovers in international corporate taxation.” In it, the IMF lists all the ways that big businesses are able to dodge taxes today over the world and admits this is causing “significant public disquiet.” It recognizes that developing countries are being hit much harder than others and that today’s international tax laws are largely inadequate to protect them.
The report analyzes “spill-over” – that is, the impact that one country’s tax rules has on others – and finds that tax havens and other cozy corporate tax practises are having a “significant” detrimental influence over other governments’ tax policies and corporate tax-dodging behavior.
The report reveals a graph that shows how competition between countries to attract foreign investment has driven corporate tax rates down by nearly half over the past 30 years.
The head of Oxfam International Washington DC office Nicolas Mombrial said:
“Well done the IMF for publishing such a sobering ‘wake-up’ call on the scandal of global corporate tax-dodging. The mega-billion dollar technical industry that has grown up around global tax dodging needs to be tackled and shackled.
“The IMF has signalled its intent. Oxfam appreciates its focus on developing countries because they are being hurt the most, leaving them unable to raise enough to pay for decent public services like health and education. Corporate tax dodging costs developing countries at least $100 billion a year, enough to cover their basic education needs four times over.
“It’s great to hear the IMF calling for help to developing countries to shore up their tax bases – but unfortunately that call is going to sound very hollow to those countries. Similar negotiations are now happening at the OECD where developing countries have been kept almost entirely absent from the table. The IMF should help to correct this mistake immediately.
“This important report rightly sets out the problem but falls short of recommending even some basic solutions, such as calling for greater transparency in big business activities so they can be checked whether they are paying their tax where their real economic activity is.
“We agree with the IMF that the framework for tackling international tax “spill-over” is weak and we anticipate the IMF’s next steps should be to put forward some answers. We need deep structural changes – and fast. Oxfam is calling for a World Tax Authority as a forum to usher in these changes.”
Matt Grainger, Head of Media, Oxfam International, +44-1865-339128 (office) +44-7730680837 (mobile) or email@example.com