By Paul Hannon
Preparations for an overhaul of the international tax system to make it more difficult for companies to shift profits to low-tax countries advanced on Friday, with an agreement to launch talks on modifying more than 3,000 bilateral tax treaties, and on ways to ensure companies accurately measure the cost of goods and services transferred between the countries in which they operate.
Launched by the Group of 20 largest economies and members of the Organization for Economic Cooperation and Development in 2013, the planned overhaul is intended to close loopholes that allow companies to adopt legal structures and practices designed to shift their profits to the lowest tax jurisdictions, regardless of where those profits are generated.
The planned overhaul of tax rules comes as governments around the world are seeking to raise more tax to cut their budget deficits and bring down high levels of debt accumulated in the years since the onset of the financial crisis. It followed controversies in a number of countries—including the U.S., the U.K., France and Germany—over the behavior of a number of companies that operate in the digital economy.
Read more at The Wall Street Journal