UPDATE 1-Germany wants monitoring of new regime to fight corporate tax dodging
Oct 8 (Reuters) – German Finance Minister Wolfgang Schaeuble said on Thursday he would propose a monitoring scheme to ensure the full implementation of a proposed system to overhaul the way international companies are taxed.
The Organisation for Economic Cooperation and Development (OECD) published proposals on Monday to change outdated tax rules that allow multinational companies such as Apple Inc and Vodafone Group Plc to pay almost no tax on their profits in many jurisdictions.
The companies say they follow the current rules.
The OECD made the proposals at the request of the Group of 20 leading economies, which will review the plans for closing the gaps in international tax rules at a dinner meeting in Peru late on Thursday.
“Now it is important not just that we adopt this today … but that it is also really implemented,” Schaeuble told reporters in Lima ahead of the G20 meeting.
“That means, I will call for us to agree on a monitoring (system) so that what is agreed is implemented. Otherwise it is just on paper,” he said.
The OECD’s proposals on tackling so-called Base Erosion and Profit Shifting (BEPS) aim to shake up rules dating back almost a century that govern taxation of profits from international commerce.
G20 governments are expected to approve them at a summit in November, though the plan will not be legally binding.
U.S. Treasury Secretary Jack Lew said the BEPS initiative could help avoid a race to the bottom in economic policymaking.
“What we can’t do, and the initiative that’s being announced here is a way to show that we won’t, is that we can’t get into a beggar-thy-neighbor kind of economic policymaking,” Lew said.
“There’s an important step being taken here in announcing the consensus being reached on base erosion and I hope it’s indicative of the political will to do some of the positive things that are described as well,” he said.
For Germany, Schaeuble did not rule out the introduction of tax breaks for companies on revenue generated from patented or licensed research.
The government has repeatedly said it would consider introducing so-called patent boxes if there were no progress toward fair tax competition at a global level.
“That could be a way with tax means to promote research work in Germany,” Schaeuble said of patent boxes. “Many people are calling for this and there are many good arguments to do it. But we will discuss it calmly.”
Unveiling its tax recommendations on Monday, the OECD said they represented a fundamental shift, though critics said they did not go far enough.
The OECD said a conservative estimate of the amount of untaxed money moved by companies into tax havens was $100 billion to $240 billion annually, suggesting tens of billions of dollars in lost tax revenue.
Tax advisers agreed that the measures – which had been debated over the past year – could force many companies to restructure their operations and rethink how they fund themselves.
