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December 15, 2016

Companies profits on the rise while corporate tax drops, Oxfam

Over the last 30 years the net profits of the world’s largest companies more than tripled while the corporate tax receipts are falling across the world, according to a report by NGO Oxfam.

Oxfam report entitled, Tax Battles: the dangerous global race to the bottom on corporate tax, also includes the NGO’s own list of the “world’s worst tax havens”.

The report looks at corporate tax from two angles: first the impact of corporate tax havens on the global economy and second corporate tax competition between states, which the NGO brands as a race to the bottom.

In its report, Oxfam is critical of the BEPS project by the OECD, as it says that the developing economies which are hit the hardest by tax dodging didn’t have an equal seat at the negotiation table with G20 economies such as Switzerland, the Netherlands and Luxembourg who are on Oxfam list of corporate tax havens.

The NGO is also critical of tax advisors and accountancy firms, especially the Big Four, not only for helping their clients devising tax schemes but also for their influence to governments.

“The Big Four accounting firms (Deloitte, EY, KPMG and PwC) are major providers of technical expertise to policy makers in many countries (both for lucrative fees and by offering pro bono services and secondments that may generate sellable knowledge). As a result, the Big Four have the potential to exert enormous influence, positive or negative, over tax policies and the administration of tax,” the report read before giving some example of negative influence in the USA, the Netherlands and Ireland.

The OECD and KPMG declined to comment. Deloitte, PwC and EY did not respond to our enquiries at the time of publication.

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