The Organisation for Economic Co-operation and Development have recently suggested that rules designed to close tax loopholes used predominately by technology companies are not viable, due to the ever-growing digital presence within large parts of the economy.<\/p>\n
Over recent months, technology companies have faced heavy criticism as a result of their aggressive tax planning, with a recent study suggesting that from seven US high-technology companies with aggregate sales of over $15 billion, the UK only collected \u00a354 million in corporation tax.<\/p>\n
Now, instead of specially designed rules to close tax loopholes used by such companies, the Organisation for Economic Co-operation and Development have announced that they are looking at the issue of how to crackdown on base erosion and profit shifting. <\/p>\n
Such a move has been supported by the UK Treasury, who have called for \u201ccommon principles\u201d to apply to businesses whether they operate online or from a physical premise.<\/p>\n
The proposals being considered by the Organisation for Economic Co-operation and Development would change the rules on permanent establishments, which will make it harder for businesses to claim that they have no taxable presence in a country.<\/p>\n
In addition, the proposed changes are also intended to make it harder to shift intellectual property to tax havens, and address the split of taxable profits between locations.<\/p>\n