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The OECD is exceeding its mandate when it comes to taxation issues

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  • 23-01-2020 1:42pm
    #1
    Registered Users Posts: 1,667 ✭✭✭


    In an article in today’s Neue Zürcher Zeitung newspaper, the author points out that the purpose of the OECD is to ‘promote cross-border trade and investment’. The writer goes on ‘But at the moment it (the OECD) is more of a modern tax steward’. [If one looks at the charter of the OECD, the word ‘tax’ does not appear once. https://www.oecd.org/general/conventionontheorganisationforeconomicco-operationanddevelopment.htm]

    The NZZ article goes on: ‘Countries such as Switzerland or Ireland, which have small home markets, struggle to offer attractive location conditions and are punished for this. In any case, it is hypocritical when the grown-ups talk about "skewers of the same length". In Germany, for example, the state sometimes finances companies willing to settle a large part of their investments (in the lander in question). So high taxes and subsidies are all right, but low taxes are the devil?’

    ‘Can this project still be done away with? All experts say: no. After all, the USA with its pharmaceutical industry and Germany with its auto industry also seem to be careful not to redistribute too much tax substrates to other countries. And should a minimum tax remain with the reported 12.5 percent of profit and per country, Switzerland could “live” with it, since the burden is hardly lower in any canton’.

    ‘It is unacceptable that the OECD unilaterally represents the interests of high-tax countries.’

    It seems to me that many smaller governments are dumbly allowing larger countries write rules that suit them. Even small countries with high corporate income tax rates will suffer, given the economics of building most products in factories situated in small markets. Big countries are artificial entities that were created by history. Eg France and Germany are made up of a collection of smaller countries, which consolidated over time. Eg Nice and its surroundings were not part of France until 1860, having prior to that being part of the Dutchy of Savoy, which stretched up the Alps up to Lake Geneva.

    (https://www.nzz.ch/meinung/die-oecd-als-moderner-steuervogt-ld.1535748) [DE]


Comments

  • Posts: 25,611 ✭✭✭✭ [Deleted User]


    Tax systems and interactions are pretty important when it comes to cross-border trade and investment.


  • Registered Users Posts: 1,476 ✭✭✭sarkozy


    OECD involvement in taxation is nothing new.

    Think about this from a different POV. Roughly $1 billion exits sub-Saharan Africa every year due to corruption and 'aggressive tax avoidance'.

    Aggressive tax avoidance has negative consequences for rich countries like ours, yes, but it has even worse consequences for poorer countries. Think about how much tax Ireland is currently losing as a result of the current situation (Apple's billions, anyone?).

    This is ethically wrong. And economically inefficient.

    The vast majority of tax revenues, and control over taxation, lies with OECD countries. Were OECD countries to get their house in order, the world, and the global taxation system, would become a fairer place. A level playing field where profits are paid where they should be.

    This is within the remit of the OECD, which is only a policy club, which influences but does not control anything, as such. It's worth mentioning here that the Irish government has been pretty uncooperative with OECD delegations over past years.

    It's also worth mentioning that the OECD is also an important body in the management of the global overseas aid system, setting rules around overseas aid to ensure it's spent as effectively as it should be.

    So, the answer is: no!


  • Registered Users Posts: 27,347 ✭✭✭✭blanch152


    sarkozy wrote: »
    OECD involvement in taxation is nothing new.

    Think about this from a different POV. Roughly $1 billion exits sub-Saharan Africa every year due to corruption and 'aggressive tax avoidance'.

    Aggressive tax avoidance has negative consequences for rich countries like ours, yes, but it has even worse consequences for poorer countries. Think about how much tax Ireland is currently losing as a result of the current situation (Apple's billions, anyone?).

    This is ethically wrong. And economically inefficient.

    The vast majority of tax revenues, and control over taxation, lies with OECD countries. Were OECD countries to get their house in order, the world, and the global taxation system, would become a fairer place. A level playing field where profits are paid where they should be.

    This is within the remit of the OECD, which is only a policy club, which influences but does not control anything, as such. It's worth mentioning here that the Irish government has been pretty uncooperative with OECD delegations over past years.

    It's also worth mentioning that the OECD is also an important body in the management of the global overseas aid system, setting rules around overseas aid to ensure it's spent as effectively as it should be.

    So, the answer is: no!


    Ireland isn't losing billions because of Apple, the OECD arrangements would put that tax elsewhere.

    Under the OECD proposals, Ireland would lose a minimum of €2bn a year in corporation tax.


  • Registered Users Posts: 1,476 ✭✭✭sarkozy


    blanch152 wrote: »
    Ireland isn't losing billions because of Apple, the OECD arrangements would put that tax elsewhere.

    Under the OECD proposals, Ireland would lose a minimum of €2bn a year in corporation tax.
    We need to avoid parochialism on this issue. It's a global challenge.

    We need a global taxation regime to ensure taxes are collected and paid for fairly, where the money is made.

    This is why country-by-country-reporting is so important.

    Imagine what could happen if our country wasn't disproportionately dependent on tax avoidance incentives, which is distorting our domestic economy? A sensible transition period out of this would create new incentives to rebalance our economy towards proper investment in indigenous business.

    There are plenty of international examples of where this went right, and went wrong, and we need to learn from the former.

    This well will dry up eventually. So we better plan for it now.


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