The head of an international organization representing many of the globe's advanced economies says that a new, multinational tax treaty will be of "massive consequence" in preventing big companies from avoiding taxes.
Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development, says the multilateral tax treaty negotiated among 100 countries will make it harder for multinationals to shift profits to low-tax countries. Many of those countries are expected to sign the final deal in Paris on June 7.
The aim of the treaty is "helping countries collect what we believe is a fair share," Gurria told The Associated Press on Friday on the sidelines of a meeting of finance officials from the Group of 7 nations.
"Everybody should contribute in order to run our economies, in order to deliver health, in order to deliver education, infrastructure, housing, water," Gurria said.
He said governments cannot rely on taxes from ordinary people or small businesses that can't move their income among countries.
It "politically became impossible to sustain" the perception that workers are being taxed "and the big guys, the multinationals are not paying their fair share," he said.
The treaty means that countries are spared having to rewrite more than 2,000 country-to-country tax treaties. Negotiations were completed in November 2016.
The treaty is part of the OECD's effort to crack down on a practice that multinational companies developed over decades to exploit loopholes between different countries' tax laws. Political pressure to restrict the practice grew after the financial crisis hit government finances.
The U.S. is not expected to be among the countries signing. OECD officials say U.S. tax treaties with other countries already contain the multilateral deal's principles.
The OECD's 35 members include advanced economies such as the United States and Western European and Nordic countries as well as emerging economies such as Mexico, Chile and Turkey.