Thread by @alexcobham

Here's a short thread with some *stark* numbers, showing just how limited the OECD 'BEPS 2.0' tax reform proposals have become.

The secretariat proposals are at the G20 now, and published next week... so how big a deal would they be?

The numbers relate to the Netherlands, one of the biggest corporate tax havens worldwide, and part of what we've called the 'axis of tax avoidance'.

For context, here are the key parts of our previous analyses. First, a paper with @icrict last year looked at the potential impact of the reform proposals at that stage - how much would they redistribute profits, and revenues, from tax havens? osf.io/preprints/soca…

Answer: tax havens would see relatively little redistribution, with the US and some other OECD countries taking the overwhelming share of any gains, while lower-income countries would see little.

Since then, the OECD proposals have become more complicated; and have been bent further to the will of the US and France, whose bilateral negotiations have overtaken any role for the 'Inclusive' Framework, excluding most of the non-OECD members.

Jan 2020: taxjustice.net/2020/01/31/a-p…

And of course, June 2020: boom! taxjustice.net/2020/06/19/us-…

OK, back to the numbers. Our report with @icrict linked above remains the only public analysis of the potential impact of any of the reform proposals. Our data and model is all linked and available; but sadly no one else has done the same, including the OECD itself.

However- since the G20 asked the OECD to require country by country reporting from multinationals since 2015, following the original proposal of @TaxJusticeNet/@RichardJMurphy, we have some public data. Two big bits...

With the US publishing aggregate data on its multinationals, we could do the study linked above, and further work with the new data release this year.

The Netherlands role in profit shifting cost other EU countries 10 billion a year: taxjustice.net/2020/04/08/rev…

Second, the OECD published partial, aggregate data for 15 countries including the US, which allowed the first global assessment. Over $1 trillion of profit shifted in a year, about half of which we can see directly; and of that, Netherlands is way biggest
taxjustice.net/2020/07/08/wat…

So what's the new news? It's this, from @JohanLangerock who has performed the public service of bringing us the Dutch government's own assessment of the impact of the OECD proposals

https://twitter.com/JohanLangerock/status/1313863184248381441

What's the damage? We can see $95 billion of profit shifted into the Netherlands each year, in the OECD aggregate data, potentially implying twice that in reality. So how much would the reforms cost the country? 50 billion of that? 20 billion? 10?

Nope. The Netherlands might, apparently lose, OR GAIN, something short of 1 (ONE) billion euro in revenues. Which might translate, generously, to a reduction in profit shifting of er a few billion?

https://twitter.com/JohanLangerock/status/1313863187402567680?s=20

At the worldwide level, where profit shifting gives rise to some hundreds of billions in lost revenue each year (300-600, depending on the estimate); the OECD estimate revealed by the Netherlands government suggests a reduction of 47-81 billion.

https://twitter.com/JohanLangerock/status/1313863186064564232?s=20

If delivered, that's better than nothing. You would worry about the distribution - how much of it is captured immediately by the US and a few other OECD members, and what's left for others? And of course these are estimates, not facts, so much could change.

But I'm struck by the uncertainty in the Netherlands numbers. If the estimate is that this country, perhaps the biggest single profit shifting jurisdiction in the world, might either lose a bit or might gain a bit, what does it say about the proposals?

The worry would be this: that the proposals are so unambitious that even the biggest tax havens may not experience much redistribution away; and that the proposals are so complex that they could even gain.

The flipside of this: the proposals would be asking many countries - including all the IF members who are so fed up they're stating publicly that they have had no say on the outcome - to take on complex, resource-intensive rule changes which *might not even raise any revenues*

Reforms are desperately needed, and the spirit of the OECD approach is right. We *must* (1) align profits with the location of real activity, to impede profit shifting; and (2) require minimum tax rates to make shifting unattractive.

But the OECD is not delivering on either.

The OECD is also failing on (3): the need to have a genuinely inclusive process, given that the results will be imposed worldwide. Where does that take us? It's starting to look a lot like the UN, the one body with the legitimacy to hold global negotiations over complex issues