The era of financial secrecy for multinational corporation (MNC) may have also ended just like the banks after the global financial crisis in 2008.
The governments across the world, armed with public outrages to financial institutions as the main cause of the crisis, decided to “clip the wings” of the banks by introducing many tighter new regulations regarding the financial market that, arguably, may derail the global economic recovery.
Not enough with the banks, the governments of major economies led by G-20, are now trying to go after taxes of multinational companies, which they alleged using tax planning schemes to avoid paying their “fair share” of taxes that can be used to finance economic development for the public, which facing deep spending cuts especially in many major economies such as United Kingdom (UK) and United States of America (US).
In the era of digital economy, the governments’, including UK and US, pursuit for such action is getting a momentum after they learned internet firms and consumer companies such as internet giant Google Inc, Amazon Inc and Starbucks Coffee racking up billions of US$ dollars of profit due to using complex tax schemes, from tax loopholes to tax haven jurisdictions, to avoid paying higher taxes in their home country of residence as well as to pay less taxes in the host country where they get the source income. The money usually reinvested by the companies to their units to expand the businesses.
Organisation for Economic and Cooperative Development (OECD), which become at the forefront fighter for taxes issues, introduced a project called Base Erosion Profit Shifting (BEPS), a term which refers to tax planning strategies that exploit gaps and mismatches in tax rules to make ...
... middle of paper ...
...omy”, OECD Digital Economy Papers, No. 216, OECD Publishing. http://dx.doi.org/10.1787/5k4c6tbcvvq2-en
Bergin, T, ‘Special Report: How Google UK clouds its tax liabilities’, Reuters News (London, 1 May 2013), http://www.reuters.com/article/2013/05/01/us-tax-uk-google-specialreport-idUSBRE94005P20130501 accessed 20 January 2014
___ ____, ‘Special Report: How Starbuck avoids UK taxes’, Reuters News (London, 15 October 2012), http://uk.reuters.com/article/2012/10/15/us-britain-starbucks-tax-idUKBRE89E0EX20121015 accessed 20 January 2014.
___ ____, “Special Report: Amazon’s billion dollar tax shield’, Reuters News (London, 6 December 2012), http://uk.reuters.com/article/2012/12/06/us-tax-amazon-idUSBRE8B50AR20121206 accessed 20 January 2014.
Timeline History amazon.com, http://amazongenius.com/timeline-history-amazon-com/ accessed 20 January 2013
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