G20 vows to combat corporate tax avoidance
- Another giant international company, Facebook, has now been accused of ducking its tax obligations.
- Facebook allegedly paid no corporate income tax in the US last year, and instead reclaimed $451m in taxes from the Internal Revenue Service, despite recording profits of over $1bn, US lobby group Citizens for Tax Justice has claimed.
- Thanks to tax deductions the social network can claim on stock options granted to its executives as part of its recent listing on the Nasdaq stock exchange, the company stands to benefit from a further $2bn of tax deductions in the future, the lobby group alleged.
- Plan of action
- The report by the OECD was released earlier this year, and found that:
- inconsistencies between different countries' tax rules enable companies to move their profits to lower tax jurisdictions
- the amount of taxable profits in a given country increasingly depends on hard-to-value intangibles such as intellectual property rights, services or brands
- international royalties and licence fee payments, mostly paid between different subsidiaries within the same business group, grew 170-fold between 1970-2009
- tax rules fail to take proper account of the growing volume of e-commerce, which presents particular problems as to which country has tax jurisdiction
Published February 17, 2013
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