Margaret Hodge, the group’s chair and the former chair of the Public Accounts Committee, said their assessment of the BEPS process and recommendations was that the OECD had done well to build consensus, but had not gone far enough.

Its report calls on the UK government to take the lead by introducing public country-by-country reporting (CBCR) for UK publicly quoted companies, whilst pressing the case for public CBCR on a multilateral basis.

Other recommendations include compelling the UK’s overseas territories and crown dependencies to adopt public registers of beneficial ownership, and requiring the Treasury to provide an annual assessment of the international spillovers from UK tax, explaining how changes in corporate tax policy or new tax incentives impact on the G20’s ambitions and concerns in relation to global tax avoidance.

Hodge said: ‘We need to open up the affairs of global companies to public account if we are to clean up the widespread abuse that pervades so many international businesses. Only when we know who owns what, where the assets are owned, where the money is earned and what tax has been paid, can we have confidence in the fairness and integrity of the tax system.’

However, the report is also critical of the complexity of some of the BEPS proposals, and the failure to take into account the difficulty of defining ‘source’ and ‘residence’ in relation to digital economic activity in particular.

Hodge said: ‘The new rules add to an already complicated tax system. Corporations, aided by an army of advisors, banks and lawyers, can exploit these rules to avoid paying tax where value is genuinely created. This, could further undermine public trust in the tax system.’

The report is critical of the role of the UK government, saying it has been a ‘difficult friend’ of the process, leading on the OECD’s work in public while undermining the effectiveness of the same proposals behind the scenes.  

It states: ‘The evidence suggests that while the UK has played an important role in driving international co-operation it has resisted important proposals which could have more effectively avoided profit shifting by global corporations.’

In support of this view, the report the UK’s premature introduction of the diverted profits tax, its adoption of a patent box approach, attempts to water down controlled foreign company (CFC) rules, and its failure to take a harder line on so-called tax havens such as the British Virgin Islands.

It quotes an unnamed OECD source who alleged that some of the UK’s moves had been ‘unhelpful’ and that UK diplomats had ‘pushed back’ against initiatives such as strengthening CFC rules.

Looking ahead, the report says the OECD’s proposals are a ‘sticking plaster’ on a global tax system that is struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment.

It says the BEPS process should represent the first step in a longer process of radical reform of corporate tax. This could include introducing a unitary based tax system with formula apportionment overseen by a global body such as the OECD or the United Nations whereby each company would submit one report of consolidated accounts for the global group.

This report would specify the group’s assets, the size of the workforce and sales. The overall profits would be then divided up among jurisdictions according to an agreed formula based on these factors. The APPG on responsible tax argues that this approach would reflect the reality that subsidiaries of companies are not separate entities that trade with one another, but are actually all parts of one global company.

Toby Quantrill, Christian Aid’s principal adviser on economic justice, said: ‘This cross-party report is a gift to the government of Theresa May, who has criticised multinational tax cheats and said she wants to tackle corporate irresponsibility of the sort exemplified by BHS.

‘Every tax scandal leads to promises of a crackdown, but the last government rarely matched words with action.  As the report states, David Cameron’s government made some very positive changes in the UK such as introducing a public register of beneficial ownership, but on other issues lobbied behind the scenes against positive change.

‘Theresa May’s government must prove it takes this issue seriously by adopting the proposals in today’s report in full, and following through with determination.’

The APPG on responsible tax report, A more responsible global tax system or a ‘sticking plaster’? is here.