OECD To Launch Attack On Corporate Tax Evaders

by Jason Gorringe, Tax-News.com, London

29 October 2001

In the recently released 'Draft Contents of the 2002 Update To The Model Tax Convention', the Organisation for Economic Cooperation and Development (OECD) announced a proposed change to corporate taxation rules, designed to crack down on cross border tax evasion.

If the planned changes come into effect, a member government would be permitted to recover taxes due from a company based in its own country from a parent organisation based in another member state.

The revised Article 27, 'Assistance in the Collection of Taxes', lays this provision out, (in typically clear and concise OECD fashion!): 'When a revenue claim of a contracting state is enforceable under the laws of that state and is owed by a person who, at that time, cannot, under the laws of that state, prevent its collection, that revenue claim shall, at the request of the competent authority of that state, be accepted for purposes of collection by the competent authority of the other contracting state.'

According to the OECD, the contents of the 2002 update will be finalised at the meeting of the working party in February 2002. The update will then be sent on to the Committee on Fiscal Affairs for approval.

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