ICRICT declaration

2 June, 2015
Source: 
ICRICT
On 2 June 2015, the Independent Commission for the Reform of International Corporate Taxation (ICRICT) launched a global declaration calling for an overhaul of the outdated international corporate tax system and demanding broad, sweeping changes in the current rules and governing institutions.

The declaration argues that the current system is obsolete and ineffective in preventing tax abuse by multinational corporations and urges all world leaders to be bold in their reform or they risk escalation of the already fierce public discontent over corporate tax scandals.

Some key points are:

  • Tax abuse by multinational corporations increases the tax burden on other taxpayers, violates the corporations’ civic obligations, robs developed and developing countries of critical resources to fight poverty and fund public services, exacerbates income inequality, and increases developing country reliance on foreign assistance.
  • The current reform efforts of the G20/OECD Base Erosion and Profit Shifting initiative is a step in the right direction but fundamentally inadequate because in this context the decision-making power is not globally representative. The challenges of tax abuse demand global tax solutions that cannot be created outside of an inclusive global tax body with all nations at the table.
  • The primary enabler of international corporate tax abuse is the separate entity principle—a legal fiction that enables the flow of vast amounts of taxable income away from the underlying business operations.

The declaration recommends that all countries:

  • Tax multinationals as single firms with developed countries imposing a minimum corporate income tax rate during the transition
  • Curb tax competition to prevent a race to the bottom
  • Increase public transparency of taxes paid by multinationals
  • Build inclusivity into international tax cooperation by establishing an intergovernmental tax body within the United Nations and begin drafting a UN convention to combat abusive tax practices.

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