Loopholes allowing multinational companies to slash their tax bills to little or nothing are to be closed under an international crackdown unveiled today.
Practices including profits being stashed in offshore subsidiaries and tax-deductible expenses being claimed in various countries are to be targeted by new rules published by the Organisation for Economic Co-operation and Development (OECD).
The body, which represents the world’s leading countries, said international tax rules dating back to the 1920s needed to be updated to keep pace with globalisation and the digital economy.
It said outdated structures were “leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes”.
British Prime Minister David Cameron welcomed the proposals, which were produced at the request of the G20 major world economies.
OECD secretary-general Angel Gurria said: “This action plan marks a turning point in the history of international tax co-operation.”
He said it would allow countries “to draw up the co-ordinated, comprehensive and transparent standards they need” to prevent companies exploiting rules to reduce their tax bills.
In Britain, questions over the amounts paid by the likes of Starbucks, Google and Amazon has drawn political attention to the question of how multibillion-pound corporations structure their tax affairs.
Mr Cameron said he was “delighted” the OECD had produced the report.
He added: “Taxpayers, governments and businesses all suffer when some companies manipulate the tax system to avoid paying their fair share of taxes.”