U.S. 'blocks' tax avoidance reform plans, proposals watered down

U.S. 'blocks' tax avoidance reform plans, proposals watered down

Summary: 'Enough is enough,' say EU countries trying to crack down on the global tax avoidance problem. But the U.S. isn't playing fair, and behind closed doors is stamping its feet.


France may not have the backing it wants to push through sweeping international tax reforms. The culprit? The U.S., which reportedly threw its political toys out of the international diplomatic pram.

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Governments to target U.S. tech tax avoiders, says leaked draft action plan

Governments to target U.S. tech tax avoiders, says leaked draft action plan

A leaked action plan seen by Reuters suggests an impending crackdown in tax avoidance by Western governments on major technology firms, which seek to lower their tax bills through less-than-ideal — albeit legal — methods.

It comes at a time when the EU member state continues to battle against some key tech companies for allegedly avoiding paying the full amount of tax in the country.

Last week, a leaked action plan, seen by the Reuters news agency, suggested that G20 countries were preparing to crack down on companies like Apple, Amazon, Google, and others who use less-than-desirable tax avoidance schemes to lower their overall tax bill.

In some cases, "lowering" actually means "negating." Some companies, such as Starbucks, paid zero corporation tax in recent years.

Microsoft faces a €52.5 million ($68m) tax bill in France. Meanwhile, in the U.K., politicians continue to dig into Google and Amazon. Tax authorities raided LinkedIn offices in France earlier this year, amid claims that the company fluffed up somewhere.

The economic and tax policy advisory group for G20 countries, the Organisation for Economic Cooperation and Development (OECD), wants to close the tax loopholes that allow these companies to pay zero tax in many European nations.

The OECD's action plan, dated May 27, specifically called on these companies to shift their profits elsewhere in the world. "Domestic and international tax rules should be modified in order to more closely align the allocation of income with the economic activity that generates that income," the document noted.

It comes at a time when European nations are now demanding "enough is enough."

But the U.S., according to reports, cried afoul, because Washington officials are calling for "moderate" changes rather than massive overhauls, according to sources familiar with the matter speaking to The Guardian.

While the Americans want changes to the rules, they do not want widespread, sweeping changes, unlike the French and some other G20 nations. Tweaks to existing international tax treaties are good for American multinationals, the publication noted, citing its sources, but it doesn't want new passages "spelling out how the digital economy should be taxed."

But because the OECD is consensus driven, the action plan is expected to pass through with watered-down recommendations in key areas.

Only a few weeks ago, Apple was at the center of a committee hearing in Congress to explain how its tax arrangements work, in a bid by lawmakers to determine whether the company is avoiding paying the full amount of tax.

The U.S. government, however, kept its nose out of the legislative branch hearing.

Many shouldn't be surprised. When the U.S. stamps its feet, it often gets its way. No more so than recent developments in the EU Data Protection reforms that would have seen anti-U.S. spying clauses included in the final draft removed after a leaked copy of the regulation was outed, just weeks before it was publicly announced.

Lo and behold, the U.S. pressured the EU into removing the clauses, which would have prevented PRISM-like surveillance on EU citizens had the regulation been ratified there and then.

Topics: Tech Industry, Government US

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  • No surprise here.

    Considering our lawmakers are owned by the very same corporations avoiding taxes, it's delusional to believe that things will change in any substantial way. Ours has to be one of the most corrupt governments in the world.
    • Agreed

      Totall agree.

      However, for the naive out there - If they think f***ing Tax Authorities over is isolated to the EU, and the open EU free market, and not happening in the Good ol' US of A, I think they are sadly deluded.
  • Tax Thugs

    How is government taxation any different than a mafia shakedown? Because it's legal? Because politicians make it legal? When you tax a company, you only tax yourselves. Cost will be passed along to the consumer. We let politicians, who want all of that money to spend on themselves and their benefactors, shape the debate as an "us against them" emotional proposition. The reality is that politicians are manipulating the masses to the benefit of themselves and those that finance their election campaigns.
    • Which bit don't you agree with?

      Not knowing anything about you, I don't know where you live, but in the UK our taxes go to fund everything. Education, healthcare, social security, transportation, bin collection, street lighting, police, fire, parks, etc. If we didn't pay taxes we would still have to pay for these services but individually, and my guess is that we wouldn't get better value for money and less corruption. I'm happy to pay taxes and see it as my duty as a citizen to pay a fair and proportionate amount of my income to make the society I live in better for myself and for all.

      As for the corruption of politics by parties with a vested interest, easy. Allow a set amount from taxes to go toward campaigning for all parties; maybe not shared evenly but certainly not based on share of votes/seats etc. Also ban lobbying and fire any politician caught benefiting from lobbyists. Works in my brain.
      • Waste of time

        The "taxation is theft" crowd is as ideologically driven and looney as the "property is theft" radicals of yesteryear. You'll have better results trying to teach a lobster to play the violin.
      • "Govt can spend my money better than I do"

        Yeah, yeah, yeah. I get it. Your faith in politicians to manage your money is impressive.
        • So the alternative is?

          Seriously, what is the alternative? Should we all fill in a ballot paper saying what % of our income we wish to be appropriated to each public service?
          I'm not saying the current system is perfect, far from it, but can anyone show me an alternative method of maintaining a country without taxing the population to pay for it? Who pays for the roads? Should I keep a credit card empty and handy in case I need the fire service? Do I get more say in spending reviews than the dolies we pay to support?
          Little Old Man
    • Re: When you tax a company, you only tax yourselves

      You do know these companies are legally separate individuals, right?
  • A good writer, but reporting the obvious.

    Another case of the privileged class taking precedence.
  • Fix your own tax code, don't force it on others

    As mentioned in this article, the issue is that the corporations can 'shift their profits'. If you don't like them doing that in your country, change your tax code so they can't: tax the actual sales, tax the gross not net, tax the air they breathe, tax the money as it crosses over the digital wire out of your country, whatever. It's in your borders, you do it the way you want. If you did that, you wouldn't have to worry about whether another country objects or not.

    Obviously, the company can choose not to do business their either, but that's their choice too.

    We can have a philosophical debate as to which way is the right way, but that's why there are different countries. You want to do it the way that country does, fine go to that country. Its the same reason the States have states; its so each can do their own a little bit differently and give people choice.

    And yes, corporations are just groupings of people. Powerful people, perhaps corrupt people, but people none the less.
  • What do "the Americans" really want?

    The problem is not that American PEOPLE want to let their corporate masters avoid taxes, it is that those corporate masters have pulled a gigantic CON JOB on the people with the Tea Party and the GOP. Gerrymandered districts have locked out the influence of voters who see through the scam, at least so far. Some of us are working to overcome this, but it will take some time to reform the system. Meanwhile, even the voters who would benefit from more honest taxation are opposed to it because the politicians who would help them are believed to be "socialist" or "tax and spend liberals" or "anti-God," while the politicians who want to keep the status quo are perceived as "good Christian Americans."
    • What do "the Americans" really want?