As millions of Americans get ready to file their tax returns, the Organization for Economic Co-Operation and Development is pushing for countries to get tougher on corporate tax reform.
The OECD, a Paris-based think tank, said aggressive tax plans by many multinational companies have used corporate structures that shift profits to countries with lower corporation taxes, which represents a grave risk to tax revenues, tax sovereignty, and tax fairness.
"These strategies, though technically legal, erode the tax base of many countries and threaten the stability of the international tax system," said OECD Secretary-General Angel Gurria.
The OECD released a report on "base erosion and profit shifting" on Tuesday, ahead of the upcoming Group of 20 nations (G20) finance ministers' meeting in Moscow later this week, suggesting tax reforms that would tighten rules global business practices.
In order to crack down on taxes globally, the OECD report calls for increased transparency on effective tax rates and improving tax compliance, both onshore and offshore, which remains a key priority for both securing governments' revenue and leveling the playing field for businesses of all sizes.
The OECD said the ability for big companies to move profits back and forth overseas, and exploit tax loopholes, gives them a distinct advantage over small businesses. Some multinationals have found ways to pay as little as 5 percent in corporation tax, while the tax burden on smaller businesses is as much as 30 percent.
"As governments and their citizens are struggling to make ends meet, it is critical that all taxpayers — private and corporate — pay their fair amount of taxes and trust the international tax system is transparent," Gurria said.
"Big corporations are being let off the hook. The reality and the critical point is that we are penalizing the small- and medium-sized businesses, while providing a special tax to the biggest companies — there is something fundamentally wrong with that distinction," said Mark Grant, managing director at Southwest Securities.
"The real story, in my opinion, is not to focus on what Apple and Google, et al., pays, but upon what Congress allows them to pay," he added. "In short, those in Congress and the Senate should change the laws to make them fair and applicable across the board."