China considering plans to help close international corporate tax loophole

The South China Morning Post reports that China is mulling plans to tighten tax reporting requirements on multinationals operating in the country to help close a ­massive global loophole. If the plan goes ahead, multinationals would have to file extensive reports on internal pricing and costs between overseas branches and headquarters. The plan is China’s contribution to a global effort to stamp out the common practice of multi­nationals altering the price put on labor, services or intangible asset transfers within global ­operations to allow firms to divert profits to low-tax countries. The OECD estimated that these practices amount to about US$100 ­billion-US$240 billion in lost tax revenue each year, or 10% of global corporate income tax revenue.