Bid to close tax loopholes that save big firms billions Loopholes allowing multinational companies to slash their tax bills to little or nothing are to be closed under an international crackdown unveiled yesterday. Practices including profits being stashed in offshore subsidiaries and tax-deductible expenses being claimed in various countries are to be targeted by new rules published by the Organisation for Economic Co-operation and Development (OECD). The body, which represents the world's leading countries, said international tax rules dating back to the 1920s needed to be updated to keep pace with globalisation and the digital economy. It said outdated structures were "leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes." Prime Minister David Cameron welcomed the proposals, which were produced at the request of the G20 major world economies. OECD secretary-general Angel Gurria said: "This action plan marks a turning point in the history of international tax co-operation." He said it would allow countries "to draw up the co-ordinated, comprehensive and transparent standards they need" to prevent companies exploiting rules to reduce their tax bills. Mr Cameron said he was "delighted" the OECD had produced the report. He added: "Taxpayers, governments and businesses all suffer when some companies manipulate the tax system to avoid paying their fair share of taxes." TUC general secretary Frances O'Grady said: "It's good news that the OECD has recognised the need for bold action to stop the likes of Amazon, Google and Starbucks shifting money around the world to reduce their tax bills. "A new global law against "double non-taxation" is vitally important and we want the British Government to signal immediately that it will comply. "The OECD should be given the chance to make these proposals work, but we are still concerned that multinationals will use tricks like "intra-group transfer pricing" to avoid tax. While we welcome the steps taken by the OECD today, it should monitor the impact so that if these proposals don't solve the problem, it can move immediately to tougher action that will. Mr Gurria said: "International tax rules, many of them dating from the 1920s, ensure that businesses don't pay taxes in two countries - double taxation. This is laudable, but unfortunately these rules are now being abused to permit double non-taxation. The action plan aims to remedy this, so multinationals also pay their fair share of taxes. The OECD said its plan offered a global road map that allowed governments to collect the tax revenue they need. It was unveiled at the G20 finance ministers" meeting in Moscow yesterday. The plan targets "base erosion and profits shifting" (BEPS) - a term describing the way multinationals can shift profits and income around tax jurisdictions. The proposals acknowledge the importance of addressing the digital economy, which offers "a borderless world of products and services that too often do not fall within the tax regime of any specific country, leaving loopholes that allow profits to go untaxed." The OECD said the new standards would prevent "double non-taxation" as well as "treaty shopping" - complex arrangements allowing businesses to take advantage of favourable tax treaties between different countries.