Multinational Corporations (MNCs) are notorious for looking to declare profits in low tax rate jurisdictions (or havens) in a bid to maximise returns. In doing so, many countries that host subsidiaries of MNCs – with evidence of production activities and employment – miss out on revenue due to them when such companies claim zero profits even as they declare profits elsewhere.
This affects many low-income countries. It is, therefore, encouraging that this is one of the aspects around which the upcoming United Nations Framework Convention on International Tax (at its Article 5) seeks a shift that would see MNCs “paying taxes where they play”– in other words, paying taxes in the locations they conduct business.
