US tech companies move against tax avoidance reforms

LOBBYISTS representing Silicon Valley have urged the OECD to halt curbs against tax avoidance.

The Digital Economy Group, a lobbying group dominated by leading US digital firms, has written to the OECD (pictured) insisting that any correlation between multinational digital business models and tax leakage is purely coincidental, the Guardian reports.

It said: “Enterprises that employ digital communications models do not organise their business operations differently as a legal or tax matter.”

The letter went on to say any measures brought in to tackle avoidance should not specifically target digital companies, a move it claimed would penalise their operational innovation.

The OECD, though, is unlikely to be receptive, having spent recent years working on a solution to what it calls base erosion and profit-shifting, through which multinational companies can locate activities in tax regimes that suit them best.

The body’s action plan attempts to address the digital economy, which it has said offers a borderless world of products and services that too often fall outside the tax regime of any specific country, leaving loopholes that allow profits to go untaxed.

Last year, at the request of the G20, the OECD identified 15 steps governments need to take to tackle tax base erosion and profit-shifting.

Companies including Google, Amazon and Starbucks have been in the firing line for their use of offshore jurisdictions to drive down their UK tax liabilities.

In a Public Accounts Committee hearing in November 2012, committee chair Margaret Hodge branded their practices “immoral”, and in a more recent hearing described Google as “evil”, in reference to the company’s mantra “don’t be evil”.

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