Every day, the world’s poorest countries lose $3b in tax revenues as multinationals sluice their profits through their national boundaries in order to avoid taxes in rich countries, and then sluice the money out again, purged of tax obligations thanks to their exploitation of tax loopholes in poor nations.
The secret to all this tax-dodging is a complex grift called “base erosion and profit shifting” (BEPS). Like many of the most important and dangerous things in the world, it’s boring, complicated, and very important, and the reason it persists is that the boringness and complexity baffles and bores people so they stop paying attention to it, leaving it to chug along, despite its importance.
At its core, BEPS involves using bookkeeping fictions to transfer your profits to low-tax jurisdictions and your costs to high-tax jurisdictions. BEPS abuses “transfer pricing,” which is the
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