Thirty-one countries belonging to the Organization for Economic Cooperation and Development (OECD) agreed to adopt automatic exchange of tax reports to stop multinational companies using complex tax arrangements to avoid paying corporate tax.
The new rules will make it harder for firms to hide money in tax havens or play one country’s tax authority against another, BBC News reported.
Under the agreement, international firms must now pay tax in the country where the profits are made, the report said.
The information, including how much they make and how much tax they pay in the county, will be available to every other country that has signed up to the agreement, the broadcaster said.
OECD secretary-general Angel Gurría said the agreement would have “an immediate impact in boosting international cooperation on tax issues, by enhancing the transparency of multinational enterprises’ operations”.
The move follows public outcry over multinationals that circumvent the law to pay less tax than they should.
Earlier this week, technology giant Google was widely criticized for not paying the correct corporate tax after it struck a deal with the British government to pay 130 million pounds (US$185.28 million) in back taxes for the past decade.
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