MOSCOW, July 19 (UPI) -- An organization representing 34 of the world's developed economies proposed an international corporate tax reform package in Russia Friday.
The Organization of Economic Cooperation and Development, which addresses economic concerns of many of the richest countries on Earth, proposed 15 tax principles which, if adopted by its members, would dramatically reduce the ability of corporations to exploit gaps in tax laws that exist between various countries, The New York Times reported.
Some of the world's most well-known international companies, like Starbucks and Apple Inc., have been lambasted for paying little to no taxes, despite making billions of dollars.
Starbucks, for example, paid no taxes in Britain, the Times said. The company later volunteered to pay the British government $16 million, realizing that the public was reacting negatively to the news that it had legally avoided paying its fair share, the Times said.
The OECD proposals, presented to the Group of 20 finance ministers meeting in Moscow, are meant to curb "treaty shopping," a practice in which corporations make profits in one country, but pay taxes in another.
"It's a matter of justice and fairness," said Angel Gurría, the secretary general of the OECD.
French Finance Minister Pierre Moscovic said some of the world's largest companies pay an income tax around 3 percent -- far less than the burden shouldered by individuals or small companies.
As corporations manage to squirm out of paying taxes, the financial burden shifts to others. By example, U.S. corporations once paid 40 percent of all income tax to the U.S. Treasury.
That was several generations ago. Now, income tax paid by U.S. corporations comes to about 20 percent of the total, the Times said.
If financial leaders adopt the proposals at the Group of 20 meeting, they will be presented to heads of state at a Group of 20 summit in September.