LONDON, Oct 23 (Reuters) - Big companies have pushed back against an international drive to crack down on corporate tax avoidance, documents published by the body charged with drafting new rules showed on Wednesday.
The Paris-based OECD published letters from European companies including Diageo and Gazprom and groups representing the biggest U.S. multinationals asking it to reconsider proposed measures on transparency and on tackling tax avoidance, saying the plans could hit trade and investment.
But the head of the OECD's Centre for Tax Policy said that, while the body would listen to companies, they had to realise change was on its way.
"Sometimes I fear that business considers that it is business as usual, and it's not business as usual, and a number of business people, at some point, will have to understand that," he said in a telephone interview.
"The leaders of the G20 have said that they want this," he added.
Big budget deficits and revelations that companies like Apple and Google use structures that lawmakers have labeled "contrived" to avoid billions of dollars in taxes, have led to growing calls to close corporate tax loopholes.
The companies say they follow the existing tax rules.
In September, the Group of 20 (G20) major developed and developing economies backed an OECD draft plan that advocated allowing countries to ignore inter-company contracts which were aimed at channeling profits into tax havens.
Businesses oppose giving tax authorities greater rights to "recharacterise" transactions - that is, to insist that profits be declared where the economic activity that generates the profit takes place, rather than where inter-company agreements say it belongs.
"The surprisingly frequent references to "re-characterisation" in the draft are, in our view, largely unnecessary, and may in their totality convey the wrong message," Paul Fox, Tax Director at British drinks group Diageo wrote, in reference to planned new rules on inter-company payments for the right to use company brands and other intellectual property.
Similar views were expressed by Russian gas producer Gazprom , while the U.S. National Foreign Trade Council, which represents over 300 companies including General Electric and Google, questioned the "premise that the profits of a multinational enterprise ought to be allocated across jurisdictions in proportion to employees or tangible assets".
The companies said the existing practice of recognizing inter-company transactions gave business greater certainty and encouraged trade by helping ensure the same profits were not taxed more than once.
Business groups were also cool on a proposal tabled in June by the Group of Eight (G8) leading developed economies, that companies should provide information to tax authorities on their earnings and tax payments on a country-by-country basis.
The idea was that greater transparency would help tax authorities - especially those in developed nations which lack the investigative resources of richer nations - to spot when companies were shifting profits out of their countries, and thereby avoiding taxes.
But business groups including Britain's Confederation of British Industry, the United States Council for International Business (USCIB) and French employers' body Medef, expressed concerns that business would face unreasonable administrative burdens and risked having confidential commercial information leak out to competitors.
"Because of these concerns, we suggest that the OECD ought to consider alternatives to country-by-country reporting," wrote William Sample, chairman of the tax committee at USCIB, whose members include Microsoft and Exxon Mobil Corp.