At the G20 Finance Ministers meeting in Moscow Chancellor George Osborne called for reform of global tax rules including international action to tackle "profit shifting" by multinational companies to avoid tax.
Chris Jordan, ActionAid's tax justice campaign manager, said: "ActionAid welcomes the strong statement from George Osborne and other G20 Finance Ministers that the current international tax rules for multinationals are not fit for purpose. Radical reform is urgently required, particularly for developing countries who lose more to tax dodging than they receive in aid each year.
"G20 leadership on this issue is crucial but ActionAid is concerned that, although the OECD effectively sets global tax standards, it was their oversight that created the current unfair situation. Alongside the OECD, the UN must also play a central role in overseeing these vital reforms in order for the world to have tax rules that work for all, not just the richest countries.
"A recent investigation by ActionAid into the Associated British Foods group in Zambia, demonstrated that legal tax avoidance is not victimless financial engineering. When big companies avoid paying their fair share of tax, children don't get the education they deserve and families are trapped in hunger. Countries like Zambia remain dependent on international aid, instead of being able to finance their own development.
"ActionAid commends George Osborne for leading the review of transfer pricing rules, which currently allow companies like Starbucks or Associated British Foods to shift profits out of the countries they do business in and into tax havens. Fresh thinking on this issue is long overdue and tweaking the current system will not be sufficient.
"2013 must be the beginning of the end for aggressive tax avoidance by multinationals. The UK alongside other G20 and developing counties must come together to end the injustice that sees some small business people paying more tax than profitable multinationals."