Taxing Multinationals ‘Post-BEPS’ – What’s Next?

The taxation of multinational companies has been attracting a great deal of attention recent years. Company tax-planning and country tax-competition have increasingly been questioned, by the general public, media, in politics and academia. Countries compete for investment, reducing tax burdens on profits. Multinationals respond, shifting profit for tax purposes to low-tax jurisdictions by legally arranging their business affairs in a certain way to optimize their effective corporation tax burdens. Globalization speeds-up matters. The company taxation models that countries apply today originated in the 1920s. These models were of course designed to cater for interbellum societal, political, economic and business realities, and hence no longer seem ‘fit-for-purpose’ in today’s globalized market place. Corporate tax systems are antique and, now, are failing it seems, pressurizing fiscal systems in consequence. The OECD has estimated annually missed corporate tax revenues at a staggering ¼ of a trillion US dollars. To balance budgets countries resorted to raising tax burdens on consumption and labour. Economic and financial crises we now seem to have just overcome have exacerbated matters, affecting societal trust in the integrity of the tax system. The general public considers it unfair if tax bill increases are not addressed to multinationals, but to their workers and customers instead. It is often heard that moral obligations to finance expenditure equally apply to multinationals.