Multinational Corporations under Scrutiny for Global Tax Avoidance from G20

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Multinational Corporations under Scrutiny for Global Tax Avoidance from G20Due to the age of the world wide legal system, international tax planners find legal avenues that enable multinational corporations to avoid paying tax on their reported profits. The concept that multinationals use for their tax avoidance is one – have subsidiaries and partners worldwide and sales derive from a tax haven or country with a low corporate tax rate. As tax is calculated on net profit, tax expense is minimal. Today’s meeting of the G20 leaders in St Petersburg has an agenda to finally tackle the issue of multinational corporations abusing the tax system of various countries to avoid paying tax. Oxfam reported that the trends used by multinationals are harmful to developing nations. They used the prime example of Africa, which lose 2% of national income to tax avoidance. The issue of tax avoidance comes after the push from the UK that enforces tax havens like Jersey to report the income of UK nationals back to the UK. Further, the US has come to the agreement with the British Virgin Islands and Swiss Banks to report assets and income derived from US nationals. There is a noticeable worldwide trend of disclosure and compliance changes to be implemented by tax haven companies and specially banks after the push from the prime initiators the UK and the US.