Tax noose tightening for global firms

Globalisation has brought many benefits in terms of cross?border trade, efficiency, competition and the free movement of goods and labour. But it has also allowed multinational corporations (MNCs) much greater freedom to reconfigure the location of manufacturing, operations, sales and corporate services in ways which channel reported profits ? and hence tax liabilities ? to low?tax jurisdictions.

While such actions are largely legal, the view has developed rapidly in recent years that tax avoidance of this type is both unfair and economically damaging. Apart from the alleged existence of a moral imperative to pay the 'right' amount of tax, it is argued that avoidance by some shifts the tax burden disproportionately onto those who are less able to take avoiding action; that it distorts economic incentives; and that it brings tax regimes in general into disrepute.