http://www.bbc.co.uk/news/business-21481932

I'll believe it when I see it, too many self interests...

According to Private Eye, we are the worst tax haven operator in the world. All the grottiest offshore centres are in little outposts of the British Empire that we encouraged to move into this area in the 50s to bring down our maintenance costs.

I believe international law on taxation has always focused on preventing double taxation (where Starbucks might have to pay two sets of taxes for every coffee they sell in two countries). And in theory it seems all that is needed is a relatively simple set of rules to stop them using internal pricing to decide how to move money between jurisdictions.

The idea being that the taxes in question are levied on operations that add value to something. If your Caymans subsidiary doesn't do the value add, then the mechanism you use to transfer money there is a form of internal price fixing. In theory, if all the important economies climb on board, the tiddlers who gain most from this avoidance at the national level (Ireland, British Virgin Isles, Luxembourg etc) can either join in or lock themselves out of all the major markets.

In practice it's a bit like disarmament talks if every country in the world already had nukes. We all use predatory tax policies to bring businesses we want to our shores, and will all jealously guard our own privileges if we can. Countries who place political emphasis on state ownership of multinational companies (Italy, France) will demand absurd exclusions. Others that like to make capricious tax demands (Brazil, India, Argentina) could make even more trouble.

But if China and the USA are forcefully on side, then it would probably be done. Most likely using rules similar to those that prevent US companies booking revenue from California in Delaware etc. The problem is that if the president negotiates a treaty, Congress often delays ratification to annoy him. China might well push the thing through just because they want to take the lead in setting a global agreement, or they might sink it just because they felt under represented.

Ireland and Luxembourg also are tax havens and much of their past success was based on that. Every country tries to get a tax advantage to encourage inward investment, but the problem is that when you look at all the tax breaks that are given they are just another tax payer subsidy to some multinational who will move the moment that their tax privileges are withdrawn. Look at WPP the advertising company that moved its headquarters in and out of the UK depending on what the tax regime was.