OECD Inclusive Framework agrees two-pronged tax reform and 15 percent global minimum tax: Oxfam reaction

Responding to the announcement today that the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has agreed to push ahead with the two-pronged global tax reform deal and set a global minimum corporate tax of 15 percent, Gabriela Bucher, Executive Director of Oxfam International, said:  

“The world needs a fair tax deal if we are to defeat extraordinarily high inequality and stop climate breakdown. But this deal is instead no more than a G7-money grab. Rich countries are forcing developing countries to choose between a raw deal or no deal. It is just another form of economic colonialism. This is not an ‘historic’ deal ―it is history repeating itself. Those who shamelessly rigged the global tax system to their benefit over a century ago have again ring-fenced the game for themselves. 

“The new rules on making multinationals pay taxes where they are making their sales and profits will apply to just 100 of the most profitable corporations, and loopholes could let big offenders like Amazon off the hook. With so many carve-outs now in play, including the UK’s push to exempt the City of London, this one-sided deal could end up being about as helpful as a bucket full of holes. 

“The long-overdue tax reform was meant to recover billions in underpaid corporate tax for all countries. Instead, the G7 and EU will pocket more than two-thirds of new cash that a global minimum corporate tax rate of 15 percent will yield. The world’s poorest countries will recover less than 3 percent ―despite being home to over a third of the world's population. If you’re a nurse in Mexico, a market vendor in Thailand or a small business crippled by COVID-19 in Kenya, then this tax deal isn’t for you. 

“A global tax rate of 25 percent would raise nearly $17 billion more per year for the world’s poorest countries than a 15 percent rate ―enough to vaccinate 80 percent of their population. The 15 percent rate agreed by the G7 and endorsed today will do little if nothing to end harmful tax competition. It is already being seen by some in Australia and Denmark as an excuse to lower domestic corporate tax rates, risking a new race to the bottom. 

“The deal the OECD wants is skewed-to-the-rich and completely unfair. It is bad news for tax havens, but will fail to levy funds developing countries desperately need to save lives and propel sustainable economic recovery from COVID-19. This was an once-in-a-lifetime opportunity to build a profoundly more equal world where the richest pay their fair share of tax.”