Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad) said:

"If we look at what is currently on the table, it seems the existing transfer pricing system will be maintained. Basically, the new tax rules are supposed to run in parallel with the old rules, but only apply to a relatively small part of the overall profits of multinational corporations. Given that the current transfer pricing rules have proven to be both ineffective and deeply unfair, it is highly problematic that they will continue as a cornerstone of the international corporate tax system.

"In terms of the new rules, we do welcome the idea of allocating taxing rights between governments on the basis of a formula. However, it is vital that that formula reflects the interests and realities of developing countries. Judging by what is currently on the table, the major focus is to benefit where multinational corporations have high amounts of sales and users. That will be of very limited value, especially to smaller developing countries.

"As regards a new minimum effective corporate tax rate, it is highly concerning that there has been so little progress until now. The governments in the OECD’s Inclusive Framework still have the option of negotiating an effective minimum corporate tax rate, which can at least help developing countries protect themselves against the worst types of corporate tax avoidance. However, for this to happen, the interests and realities of developing countries will have to be placed as the center of the negotiations. So far, that has clearly not been the case.

"We’re also concerned that the idea of secret binding arbitration has not yet been taken off the table. If the global tax rules continue to be both unfair and open to corporate tax avoidance, the last thing we need is a secretive mechanism that might prevent countries from taking more ambitious action to protect their tax base and ensure that multinational corporations pay their share of tax.

"Developing countries have repeatedly called for intergovernmental tax negotiations to take place at the United Nations, where all countries can participate on a truly equal footing. The OECD countries have rejected this and insisted that the negotiations should take place within the OECD Inclusive Framework. However, countries are only allowed to participate in the Inclusive Framework if they sign up to the OECD and G20's existing package on base erosion and profit shifting. Furthermore, while countries have now been invited to participate in the negotiations, they have not been able to influence the mandate. Therefore, the OECD’s Inclusive Framework does not allow all countries to participate on an equal footing, and we believe that decisions on global tax rules should be made at the United Nations – not the OECD’s Inclusive Framework."

ENDS

For more information contact Julia Ravenscroft, Communications Manager at the European Network on Debt and Development (Eurodad) on +32 486 35 68 14 or jravenscroft [at] eurodad.org