A groundbreaking international tax pact signed today has been labelled a "nail in the coffin for tax avoidance schemes".
Over 100 jurisdictions have concluded talks on a cross-border agreement to swiftly implement changes to thousands of tax treaties. The product of the discussions is a pact aimed at halting abuse by companies and improving dispute resolution.
The OECD has estimated global tax avoidance costs governments up to 10 per cent corporate tax collections.
Around 70 countries, including the EU's 28 member states, China and India, will today sign the accord in Paris.
“This signing is a huge achievement and will put another nail in the coffin of complex tax avoidance structures exploited by some big businesses," said Hannah Self a partner at law firm Pinsent Masons.
The agreement will work by adjusting tax treaties that allow companies to shift profits to lower or zero tax jurisdictions. The agreement follows an initiative launched by the G20 to tackle such practices in the wake of a public backlash against tax structures put in place by companies such as Apple and Google.
Self added: “Those multi-national corporations relying on tax treaties to funnel royalties via brass-plate companies to a tax haven should, by now, have recognised that the game is up and that they need to restructure their tax affairs.”
"This treaty is part of the OECD’s wider work on tackling tax avoidance strategies that shift profits to low-tax jurisdictions. Governments have lost patience with avoidance by global companies.”