In its manifesto for the forthcoming general election the UK Labour Party has included a commitment to tax multinational enterprises (MNEs) as unitary firms. The commitment adopts recommendations put forward in a report by Danny Bertossa and myself, so naturally we are pleased.
Some have challenged whether this is feasible, and the estimates of the benefits. The report itself provides a full explanation, so anyone interested should read it, which perhaps not all the critics have. Here I will address the two main questions that have been raised: could a UK government do this, and what would be the benefits?
Those who have been following the project on base erosion and profit shifting (BEPS) will know that it is now at a crucial stage. Proposals have been put forward that would radically alter practices that have become normalised over the past 20 years, which have greatly facilitated tax avoidance by multinationals.
