International action plan against tax avoidance

OECD first presented its action plan to fight international tax avoidance at the G20 summit on 8 October. In 2013 OECD published its first report on base erosion and profit shifting (BEPS). Dr Attila Kövesdy, the head of Deloitte Zrt.’s tax division told our magazine that in 2010-2011 a new trend started in international tax payment. A good example of this so-called ‘responsible tax’ trend is when in the United Kingdom pressure from the society resulted in Starbucks paying more in taxes to the central budget than it actually had to. Why? Because until 2013 the coffee giant made GBP 3 billion in the UK but only paid GBP 8.5 million in corporate tax, channelling its profit to tax havens. They broke no laws but this practice led to negative PR and Starbucks finally decided to make a GBP 20-million tax contribution. BEPS aims at developing tax instruments which guarantee that revenue is taxed in situations of ‘dual non-payment of taxes’. OECD is developing the legal framework for combating the practice of multinational companies making use of the loopholes in the current international tax system to pay less in taxes. OECD’s proposals include the initiative of a new international agreement to modify the existing network of bilateral tax treaties worldwide (e.g. Hungary alone is party to 80 such bilateral agreements)