On February 12, 2013, The Organization for Economic Co-operation and Development (OECD) released a report revealing that many large multinational companies are paying only a marginal amount of taxes. For instance, in 2011 Google only paid 3.2% in taxes while General Electric didn’t pay taxes at all, despite the fact that in the same year these companies earned respective profits of 10 and 14 Billion dollars. According to the Secretary-General of the OECD, Angel Gurria, this is a devastating result and reveals the deficiency of international tax laws. Although the results may seem absurd, they are nonetheless legal and in accordance with the law.
Gurria urged for more cooperation on the international level in order to secure tax revenues for states in the future. Without cooperation, the enormous deficits created in the national budgets would eventually be transferred to citizens and middle-class companies.
The OECD webpage states, “These gaps, which enable multinationals to eliminate or reduce their taxation on income, give them an unfair competitive advantage over smaller businesses. They hurt investment, growth, and employment and can leave average citizens footing a larger chunk of the tax bill.”
Continue reading about the report of the OECD here.