The CIOT has welcomed today’s report from the OECD (the Organisation for Economic Development) on taxation of multinational companies.
CIOT President Patrick Stevens commented:
‘We have been saying for a long time that the international corporate tax system is designed for the mid-20th century trading economy rather than the e-enabled world of seamless multinationals we now find ourselves in. The system needs to change and adapt and that is difficult for individual countries to do: it needs bodies such as the OECD to take a lead. We welcome this report as a constructive move by the OECD and a start to a more focused debate.
‘Transfer pricing based on arms length prices has its difficulties, especially when it comes to measuring what is the correct value which should be attached to something intangible like brand value. However the underlying principle, that profit should be taxed in the country where it is generated, is a sound one.
‘Developed countries can help developing countries improve their ability to collect taxes by helping them develop robust and capable tax authorities, as well as providing broader support for measures to improve governance and strengthen the rule of law.’