The Other Paris Agreement: US Walks Out on Accord to Combat Global Corporate Tax Evasion
Less than a week after President Donald Trump announced that the U.S. would pull out of the Paris Climate Accord, the U.S. government abstained from signing another multilateral agreement in the French capital meant to combat tax evasion by companies operating in multiple countries.
The agreement, formed in conjunction with the Paris-based Organization of Economic Co-operation and Development, sought to stymie profit-shifting by multinational firms, a practice that costs the U.S. government an estimated $100 billion in foregone tax revenues each year. The OECD pegs the global annual tax loss at up to $240 billion.
On Wednesday, 68 countries signed the agreement to prevent a practice known as “treaty shopping,” in which a company with operations abroad attempts to capitalize on bilateral tax accords between the nation in which it’s based and any foreign country where it also operates. The U.S., which has been involved in the pact’s development, was not among the signatories.