By Raymond Hainey

A fresh crackdown on tax avoidance by global firms has been launched by an international watchdog.

And an end to a loophole where internet giants Google can channel billions of dollars of profits earned elsewhere to Bermuda has been pledged by the Organisation for Economic Cooperation and Development (OECD).

OECD head of tax Pascal Saint-Amans said: “We are putting an end to double non-taxation.”

But economics expert Peter Everson dismissed the OECD statement of intent as “typical talk from bureaucrats”.

He added: “They end up coming up with a statement on how they wish the world would look but the sad reality is it takes politicians to enact legislation — and that they have singularly failed to do for the last 25 years.”

Mr Everson added: “And when they weasel out, it always creates the opportunity for Bermuda to make money.”

And the OECD warned the proposed moves were part of a bigger “tax-base erosion and profit-shifting programme” which will release its recommendations next year.

Anton Hume, global head of transfer pricing at accountants at US firm BDO said a crackdown could mean companies would change their structures and move jobs out of tax havens.

He added: “It may mean that a lot of activities are onshored again.”

But head of tax policy at the London office of financial services firm KPMG Chris Morgan said the proposals were “balanced” and that, while some companies would be forced to pay more tax, big business accepted a need for change.

Google and other major firms hit the headlines two years ago when it was revealed complicated and legal tax avoidance techniques meant they could funnel billions of dollars through subsidiaries elsewhere to low tax jurisdictions like Bermuda — which has no corporate tax.

But now the OECD — backed by the G20 group of industrialised countries — aims to eliminate the loopholes that allow big business to slash their tax bills.

The proposed international tax rules came after the G20 group asked the OECD to look into ways to cut back on tax avoidance.

Major US technology companies like Google are likely to be hardest-hit — but other sectors like pharmaceuticals and consumer goods firms could also be targeted as well.

The OECD’s view on international taxation for 50 years focused on making sure companies were not taxed twice on the same profits.

The fear was that this would hinder trade and slow down economic growth.

Treaties were put in place to allow individual countries to split taxation rights to avoid double taxation — partly by providing breaks on measures designed to stop tax avoidance, like withholding taxes.

But global companies have been using legal means to make sure their profits are not taxed anywhere.

The OECD proposals, if accepted by member states, would mean that cross-border transactions would not benefit from tax reliefs in previous treaties if the principal reason for engaging in the transactions is to avoid tax.

Curbs on how much profit companies can report to centralised intra-company lending and purchasing arms — which are often based in low tax jurisdictions — are also envisaged by the OECD.

An investigation last year found that 75 percent of America’s biggest technology firms channelled revenues from European sales into low tax jurisdictions like Bermuda, Ireland and Switzerland, rather than reporting them nationally.