TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 4, 2013

Multinational Corporations and the Profit-Sharing Lure of Tax Havens

Christian AidChristian Aid, Multinational Corporations and the Profit-Sharing Lure of Tax Havens:

According to the OECD, the present situation calls for a review of the fundamentals of the international tax system. Changes to the current international tax rules should reflect how MNCs operate today, and seek to redress the unjust distribution of the global tax base. MNCs should report their profits and pay their taxes where their economic activities and investment are actually located, rather than in jurisdictions where the presence of the MNC is sometimes fictitious and explained by the adoption of tax-avoidance strategies.

Given the relevance of the analysis provided by the OECD in its report, which is supported by the findings of our own research, we suggest that the OECD and the United Nations Tax Committee jointly explore to what extent would an evolution towards unitary taxation with profit apportionment be more appropriate for the taxation of MNCs and lead to a fairer international tax system.

(Hat Tip: Mike McIntyre.)

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The report on Base Erosion and Profit Shifting from the OECD carefully avoids the big elephant in the room. The most effective and efficient tool for doing something with BEPS is changing the OECD model tax treaty. The only reason why the OECD countries unanimously could support the BEPS report was that it had no teeth. It clearly states that everyone must look after himself, and no collective effort will be seen. Would you get Irland, Netherland and Luxembourg to sign on to it if it realy had some teeth?

Posted by: GSo | Apr 4, 2013 5:28:46 AM