The global tax system was built for an industrial age dominated by western powers but it is no longer fit for an economy driven increasingly by the internet, which is changing commerce, public service and lives across the world in ways never imagined even a decade ago.
In September, the OECD announced the next phase of its recommendations for transforming the global tax infrastructure, aimed at targeting avoidance by multinational enterprises, with a particular focus on companies that move profits to taxpayer-friendly jurisdictions and those that exploit international tax treaties.
In anticipation of the reforms, RSM has released its latest research report The Evolution of Tax. We took the views of over 50 of our tax partners from around the world regarding how they think the tax landscape will evolve over the next few years, and then benchmarked those views against tax trends in 20 of the largest economies over the last half century.
The report shows that most RSM tax partners believe standard corporate taxation rates will not change a great deal over the next few years. However, George Osborne’s so-called Google-tax on foreign multinationals that minimise their UK tax liability, announced last week, puts the country out on a limb from the OECD reforms and could create a precedent that other countries may follow.
The OECD reforms will mean regulation will be tighter and multinationals will have to be more transparent in their disclosure of tax operations, but the implementation will be very challenging. One of the problems is that the OECD’s proposals involve governments giving up some of their national control in favour of a more global policy-outcome. Detailed negotiations between countries on double tax treaties will also be difficult, as will greater disclosure of transfer pricing policies.
As the OECD’s proposals begin to take shape, The Evolution of Tax provides a comprehensive guide to the last 50 years of tax regulation, while offering a well-informed vision of its future. We hope you find the report both interesting and informative.