One thing that’s needed in finance ministers’ international fight against excessive tax evasion by corporations is a lot of patience. The wait for legislative action can seem endless.
Many initiatives launched since the 1980s, most of them coordinated by the Organisation for Economic Co-operation and Development, lost their momentum.
The global financial crisis finally made the G20, the group of the 20 largest industrialized and emerging countries, agree to new regulations. As of 2017, the Base Erosion and Profit Shifting (BEPS) plan aims to stop tax-avoidance schemes that allowed company profits to be shifted across borders and prevent home nations from getting their proper tax payments.
A week ago, G20 heads of states and governments agreed to the BEPS plan. Since then, discussions have been dominated by the question of which countries will actually enforce the new regulations. In Germany, members of the lower house of parliament, the Bundestag, are hearing from corporations that in the end the nation’s authorities might have to sacrifice tax payments at the expense of other countries.
With this background, perhaps one of the most effective incentives for all G20 governments to continue the fight was the just-announced buyout by the U.S. pharmaceutical giant Pfizer of the considerably smaller Irish firm, Allergan.