“Tax rules are essential for cross-border trade, business investment, jobs and growth and it is essential that tax rules are predictable and preferably do not distort economic decisions,” said ICC Secretary General Jean-Guy Carrier. “Today’s tax rules applying to cross-border trade are based on the non-aligned domestic tax rules of more than 200 countries. This creates barriers to trade and has a negative effect on global trade, economic growth and job creation.”
Lacking coordination between countries on tax rules – including differences between OECD countries and emerging markets on source and residence based taxation – differing definitions of economic instruments and legal entities as well as administrative procedures can lead to double taxation or unintended so called double non-taxation. Responding to the OECD report the ICC Commission on Taxation said that it is essential to address these issues in the BEPS project.
“Governments must agree on acceptable forms of tax competition and avoid labelling businesses as aggressive tax planners or tax avoiders when using legislated tax incentives such as accelerated depreciation or patent box regimes,” said Taxation Commission Chair Theo Keijzer, “In return businesses must adhere to rules and principles agreed upon by and between countries.”
Speaking on behalf of world business, ICC has stressed the need for universal rather than sector specific changes of international tax rules stating that corporate income tax should continue to be levied according to where economic activity takes place and profits are rendered. Prices of goods or services must reflect economic activity and ICC agrees with the OECD report that unintended double non-taxation, in a situation with so-called hybrid instruments, should be addressed by governments.
ICC is pleased to note that its project for International Tax Reform, announced at the United Nations Tax Expert Meeting in October 2012, will be launched shortly. The project is aligned to the OECD and G20 proposal to develop new global tax standards and ICC looks forward to working together with the OECD and G20 to help define the contours of a suitable global tax framework that encourages business activities, job creation and economic growth.
With business members in all G20 countries, ICC is uniquely placed to provide business comment on the OECD proposals and the current overhaul of international taxation rules which calls for an inclusive and transparent process.
For more information visit the ICC Commission on Taxation