This policy brief describes the need for the sensible coordination of corporate income tax rules at international level, in particular in the context of digitalisation. In the same way that the manufacture of goods and services is fragmented along global value chains to reduce costs, corporate profits also transit through several countries in order to reduce multinationals’ tax bills. This fragmentation of company groups has a detrimental impact on productive investment, on workers’ involvement in management’s decisions and on collective bargaining for a fair share of the wealth.

Séverine Picard stresses that it is high time for international tax rules to be adjusted in light of the coherent business and tax strategies which multinational enterprises deploy at global level. The OECD transfer pricing rules are too complex, inefficient and even counterproductive. A move towards the unitary taxation principle is needed, while an effective floor to tax competition must also be put in place at global level. Furthermore, tax transparency is paramount. In the OECD discussions so far, the proposal for a global minimum tax rate offers the most promising prospects in terms of tax revenues: but the design has to be right. A fairer tax system is about national tax revenues, but not only these. It is also about what incentives can be put in place to promote sustainable, stakeholder-oriented business values. Workers’ representatives have a key role to play in this debate.

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Fair corporate taxation. Why and how international tax rules need to be changed_2020.pdf