On 125th July, the IMF Blog carried a post saying that over the past 30 years, corporate tax rates in all countries have fallen to very low levels, as is shown in the chart. The post says a new approach to international taxation is required, because of –
- the ease with which multinationals seem able to avoid tax, combined with the 3-decade long decline in corporate tax rates, undermines both tax revenue and faith in the fairness of the overall tax system; and
- the current situation is especially harmful to low-income countries – non-OECD countries lose about $200 billion in revenue per year, or about 1.3% of GDP, due to companies shifting profits to low-tax locations.
A new research paper from the IMF analyses various options in the context of three key criteria: better addressing profit-shifting and tax competition; overcoming the legal and administrative obstacles to reform; and ensuring full recognition of the interests of emerging and developing countries.
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