Multinationals must pay taxes in the countries where their customers are located, the Organization for Economic Cooperation and Development (OECD) proposes on Wednesday in a new plan. Governments should also be given more power to collect taxes from multinationals.
Due to all kinds of constructions, large companies now only pay taxes in countries where they have a location or have, for example, lodged patents.
"The current system is under tension and will not survive if we do not remove the stress," explains Pascal Saint-Amans, head of tax policy at the OECD.
He explains that a new system will have an impact of several percentage points on the tax costs of multinationals and that large investment hubs may be affected by this.
This means, for example, that Ireland or other tax havens will collect less tax. On the other hand, large markets for multinationals, such as the United States and France, can levy more taxes.
Earlier this year, 130 countries and territories agreed that rewriting the current tax rules was needed. The OECD was given the task of devising the new rules.