Shell wants to keep the tax world as it is – unsurprisingly

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The FT reports this morning that:

One of Europe's largest companies has warned that tensions over a planned crackdown on corporate tax avoidance pose a threat to global trade.

Simon Henry, finance chief of Royal Dutch Shell, called for urgent action by political leaders to avoid the fragmentation of global tax rules that would lead to uncertainty and double taxation for business.

The subtext is clear: Shell is saying that the OECD should back off on its Base Erosion and Profits Shifting project because big business wants things to stay as they are. And Mr Henry is not saying so without threats attached. He apparently said:
I am not being apocalyptic but you don't have to change the psychology too much to have a big impact on the willingness to carry out cross-border investment and trade.

Which is apocalyptic as well as being wrong: no one will stop trading because of country-by-country reporting and an increase in tax by a couple of percentage points.

What I do agree about is the risk of a break down in the international consensus. The UK has already done that with its Diverted Profits Tax. Shell seem to think China, Brazil and India could all do the same.

But there is a way round this. Big business could, of course, swing behind BEPS and say 'this is the best there is and we'll comply' and get governments like that of the US to fall into line. That would make a lot of sense. But trying to block BEPS does create the risk of disorder.

So be careful what you want Mr Henry; you might be your own worst enemy.


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