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OECD sets out strategies to counter corporate loss schemes

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Corporate loss carry-forwards are now as high as 25% of GDP in some countries, according to the OECD.

‘Due to the recent financial and economic crisis, the amount of global corporate losses is enormous ...  Though most of these claims are justified, some corporations find loopholes and use “aggressive tax planning” to avoid taxes in ways that are not within the spirit of the law,’ the OECD said as it released Corporate Loss Utilisation through Aggressive Tax Planning.

Seventeen countries including the UK contributed to the report, which examines some ‘commonly used’ schemes and identifies corporate reorganisations, financial instruments and non-arm’s length transfer pricing as ‘key risk areas’.

The report outlines strategies to detect and respond to schemes. ‘Working cooperatively, countries can deter, detect and respond to aggressive tax planning while at the same time ensuring certainty and predictability for compliant taxpayers,’ the OECD said.