Country by country in the FT

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On Wednesday the FT ran an editorial in which they said:

In moving to close some of the loopholes in the porous US tax code, President Barack Obama has taken on mightier forces than a retreating Republican party. Multinational companies, which will see their foreign earnings taxed more heavily, have dispatched a battalion of lobbyists to fight the plan. Mr Obama should not let this deter him: the proposals are a step in the right direction. They do little, however, to address the fundamental challenges of international taxation. …

His proposals ignore the larger policy question: how can national jurisdictions achieve fair and efficient taxation in a global economy?

Today’s patchwork of national tax rules and bilateral treaties is a drag on business and public treasuries alike. Countries must agree to divide the global tax base according to where actual economic activity takes place — and welcome competition for a larger share of that activity. Mr Obama’s tax battle, if he is serious, has barely begun.

That was fair comment. But so is this response, today:

From Dr David McNair.

Sir, We welcome your analysis that countries should agree to divide the global tax base according to where actual economic activity takes place.

One way to ensure a level playing field is through an international accounting standard requiring multinationals to report profits and tax payments in each country in which they operate. This would provide countries — rich and poor — with the information they need to identify where companies are not paying the fair amount of tax on the profits they are making.

David McNair,
Senior Economic Justice Adviser,
Christian Aid,
London SE1, UK

There is no doubt: country by country reporting is part of a fair tax system. Is that why PWC don’t like it?

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