How do governments combat tax avoidance by multinational corporations?

Governments around the world are taking steps to combat the issue of multinational corporations avoiding taxes through complex offshore structures and other legal strategies. In New York, the Department of Taxation and Finance has been actively working with the Internal Revenue Service (IRS) to promote new laws and regulations to combat tax avoidance. The focus of these efforts is to target multinational companies that are physically located in New York and those companies with income related activities in the state, regardless of whether such activities are performed in-state or from an offshore presence. The main goals of these efforts are to ensure that all businesses pay their fair share of taxes and to prevent companies from avoiding tax liabilities by shifting profits offshore. To tackle this issue, the government has put in place certain organizations such as the Multistate Tax Commission (MTC), which is a consortium of 38 states and the District of Columbia. The MTC works collaboratively to investigate and audit multinational companies for possible tax avoidance. Additionally, New York State recently passed the “Dormant Corporation Tax” which requires companies to pay taxes for any income generated in the United States, regardless of whether or not those profits are kept in the US or offshore. By implementing new laws and regulations as well as employing third-party organizations to investigate multinational corporations, the government is actively taking measures to combat tax avoidance by multinational corporations.

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How do governments combat tax avoidance by multinational corporations?

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