Companies are behaving in precisely the way that our international tax system incentivises them to behave

Government and business have generally sought to distinguish between the vast majority of companies, which engage in ‘reasonable’ tax planning, and a small minority, whose tax avoidance becomes ‘aggressive’. Martin Hearson argues that if the government is committed to serious reform to address tax avoidance, it needs to abandon this distinction. The real problem is the incentives provided by the international tax system, and the real misconception is about what the system is designed to achieve.