The recently published declaration by ICRICT (Independent Commission for the Reform of International Corporate Taxation) argues that the current tax system has become obsolete as a result of globalization and the changing world economy. ICRICT states that an adjustment of the tax system is indispensable and that the efforts made by the OECD are not sufficient. The commission therefore aims to push governments around the world to take action. The declaration presents a set of principles and recommendations for reform. One key recommendation is to abolish the separate entity principle which is considered to be the fundamental problem of the current tax system. ICRICT recommends to treat multinational corporations as single and unified firms and to divide the taxable profits between the countries where the income generating activities are located.
The current tax system is broken and needs reformation