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June 17, 2014 11:45 pm
From Mr Krister Andersson.
Sir, In your editorial “Playing fair on corporate tax” (June 12), commenting on the European Commission investigation into multinationals’ affairs, you rightly point out that much of the problem lies in the national tax systems. But your claim that tax has turned into a largely voluntary gesture for multinationals is not correct.
A small number of high-profile reports on corporate tax payments in individual countries must be considered against a background of the trend of rising corporate tax revenues as a share of gross domestic product in the OECD in the past couple of decades. If such payments are voluntary then corporates are certainly showing extraordinary generosity!
You call for corporations to report how much tax they pay on a country-by-country basis. Transparency is indeed important and businesses are engaging constructively with the OECD/Group of 20 work on base erosion and profit shifting, or BEPS. However, this exercise must not develop into an excuse for governments eager to re-regulate markets.
While governments accept the relocation of investments according to the rate of return that can be reaped globally, they must also recognise that such a shift of activity may reduce the national share of global corporate tax revenues.
The editorial fails to recognise that the outcome of competitive global market forces is being challenged by governments and tax authorities.
What the trade ambassadors in Geneva are accomplishing in promoting trade and cross-border investment may be taken back by finance ministers at meetings in Paris and Brussels.
Krister Andersson, Head, Tax Policy Department, Confederation of Swedish Enterprise, Stockholm, Sweden
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