An international effort has started to prevent multinational corporations from avoiding their fair share of taxes in the respective countries where they do business. On July 19, the 34-member Organization for Economic Cooperation and Development announced a 15-point action plan on "base erosion and profit shifting."
The OECD member countries and eight emerging economies — including Russia, China and India — will spend up to 2½ years to work out specific recommendations for domestic rules and international treaties aimed at preventing multinational corporations from taking advantage of different tax systems and rates among countries to greatly reduce their tax burden.
The problem of international tax avoidance is related to issues of countries, on one hand, trying to squeeze as much tax revenue as they can from businesses and, on the other, trying to attract influential companies with low corporate tax rates.