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Netherlands, and others. By invalidating those government-sponsored tax deals, the Commission was essentially shutting down EU tax havens. That meant no more secret tax deals for large U.S. multinationals directing worldwide profits to Europe. Even before the Commission decision on Apple came down, the European Union had expressed its own determination to clamp down on multinational tax dodging by issuing a raft of directives increasing corporate tax transparency, closing loopholes, and requiring its member countries to share crossborder tax rulings.45 While those directives had caveats and short-comings, they nevertheless placed a new chokehold on EU tax havens. And curbing European tax havens made it that much harder for U.S. multinationals to game the U.S. tax system.
Base Erosion and Profit Shifting (BEPS) There’s more. Fed up with multinationals conning governments out of needed tax revenue, in 2012, world leaders from the G20 group of countries, including the United States, endorsed a new international effort to clamp down on abuses. Called the Base Erosion and Profit Shifting (BEPS) Project, set up under the auspices of the Organization for Economic Cooperation and Development (OECD), the project assembled a group of international tax experts to figure out what steps could be taken to stop multinationals from playing governments off each other and fleecing everyone. In 2013, the BEPS Project announced a consensus by its participating countries that: (1) multinational corporations ought to pay taxes—a proposition some U.S. multinationals had been fighting against for years; and (2) corporate income taxes ought to be imposed where value is created.46 While both statements may seem straightforward, getting multiple countries to sign onto them, including the United States, was a monumental advance in international tax fairness. The BEPS Project didn’t stop there. In 2015, it announced consensus on 15 specific action plans to reduce multinational tax dodging.47 The action plans proposed, for example, revamping international tax treaties to prohibit “nontaxation” of multinational corporate profits; stopping the use of corporate “hybrid mismatches” and certain other mechanisms used by multinationals to game tax authorities in multiple jurisdictions; and improving international standards indicating when a multinational corporation had a taxable presence in a jurisdiction.
