Business

Commission calls for corporate tax review

KABANDA CHULU, Cape Town, South Africa
AN OFFICIAL from the Independent Commission for the Reform of International Corporate Taxation (ICRICT) says there is need to review the existing system of international taxation as it has been exploited by multinational corporations, thereby threatening human and economic development in affected countries.

Launching a report titled ‘ A roadmap to improve rules for taxing multinationals’, ICRICT chairman José Antonio Ocampo said the publication has presented concrete solutions to reorient the existing system of international taxation away from serving the wealthy few by focusing on addressing the needs of the vast majority of the population.

“After evaluating many alternatives, ICRICT proposes a solution to a failing system. Global formulary apportionment, coupled with a minimum corporate tax rate, is the only effective way for all countries to collect a fair share of tax revenue from multinational enterprises and avoid a race to the bottom.
“Multinationals are groups of entities that are under single management control and have a single set of owners, and should therefore be taxed as unitary firms [not as separate entities],” he said.
Mr Ocampo said tax avoidance is about human rights and people who are denied access to the services they need to lift themselves out of poverty because of tax avoidance.
“If large firms including multinationals and rich individuals don’t pay their fair share of taxes, it means no money for education, health care, infrastructure and fighting climate change. It is clear for everybody now we cannot count on foreign aid to address these questions.
“The critical issue is where the value is created and how difficult it is to identify this as we move into a more complex global economy,” he said.
He believes the proposal is the fairest one, and particularly the only one that answers the needs of both developed and developing countries such as Zambia.
Mr Ocampo said the existing system of international taxation has been exploited by multinationals.
“They even threaten their governments not to bring back any economic activity unless they implement a corporate tax they agree with.
“Tax avoidance and the push to governments to reduce corporate taxes are effectively preventing sustainable development,” he said.



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