National Post-Sovereignty – Domination of Multinational Corporations: Difference between revisions

The pressure of competition and the temptation to achieve minimal taxation drive the multinational corporation to ‘tax optimisation.’ Profit margins are then reported according to the level of the corporation’s profit taxation in various countries. The existence of systemic overestimations or underestimations is difficult for tax authorities to prove inside the intricate intra-corporate relationships. The other side of the coin is the converse ‘tax competition’ among national governments, which pushes reduction of the tax burden in an attempt to attract foreign investors. Along with investment incentives and the allocation of ‘tax holidays’ or ‘tax amnesties,’ such competition may lead to tax dumping, which, in the long run, deprives the economically weak countries of a fair share on the tax revenues, resulting in underfunding of certain chapters of public expenditures (culture, education, environment, etc.). This argument is not directed against multinational corporations as such, but against the abusing of economic power and collection of private profits at the expense of host countries’ fair shares on the tax revenues. Of course the definition of a fair share of taxes must also take into consideration the behaviour and economic performance of the respective governments, and their contributions to the ‘common good’ of a civil state (enforceability of law, internal security and protection of investment and property rights, ‘public goods’ infrastructure, etc.).