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BEPS bashing


Swiss to adopt country-by-country corporate reports


Some 200 multinational firms based in Switzerland could soon be forced to reveal their revenues and tax duties in each of the countries in which they operate. The proposed “country-by-country” reporting measure is intended to stop large companies evading taxes by shifting profits to low-tax jurisdictions.

Parliament will debate early next year the bill that would adopt minimum global standards to stamp out so-called base erosion and profit shifting (BEPS). Firms like Apple, Starbucks and Amazon have faced an international outcry for using accountancy tricks that artificially lower their tax bills.

Multinationals have lowered their tax payments by shifting profits from high-tax countries to tax havens. This is typically achieved by setting up administrative offices in tax havens that charge the rest of the group large fees for their services. These fees are then deducted from the taxable profits of operations that are carried out in high-tax jurisdictions.

Even more complex sleights of hands can send profits to offshore havens for even lower tax treatment. The most notorious of these accountancy gimmicks are known as “Double Irish” and the “Dutch sandwich”.

Automatic sharing

The Organisation for Economic Co-operation and Development (OECD) believes these practices can be stamped out with country-by-country reporting. Data on exactly where multinationals make their money and to whom they pay taxes will be automatically shared by all countries using the system.

For example, this should inhibit a mining company from making vast revenues by extracting minerals from an African state and then paying taxes on this income in a tax haven, such as Bermuda.

Country-by-country reporting would come into effect in Switzerland at the start of 2018, providing it is passed by parliament and unopposed by referendum.

In Switzerland, the system would apply to companies with an annual turnover of €750 million (CHF804 million). This would affect some 200 groups resident in Switzerland, the cabinet said on Wednesday.

swissinfo.ch

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