Leaders of the G8 major economies struck a deal on Tuesday to crack down on the “scourge” of illegal tax evasion and fight corporate tax avoidance that rob government coffers of billions.
ENNISKILLEN – Leaders of the G8 major economies struck a deal on Tuesday to crack down on the “scourge” of illegal tax evasion and fight corporate tax avoidance that rob government coffers of billions.
As countries across the world labour to cut deficits with deeply unpopular austerity measures, the G8 leaders signalled a radical change towards automatically exchanging tax data in a bid to ferret out cheats.
Gathered in Northern Ireland for a two-day summit, they also targeted legal tax avoidance by multinationals such as Google, Amazon and Starbucks that costs taxpayers billions in lost revenues.
Campaigners welcomed the deal, but said it did not go far enough.
“Tax authorities across the world should automatically share information to fight the scourge of tax evasion,” the G8 leaders said in a statement.
They pledged to make this the new global standard by developing a “multilateral model which will make it easier for governments to find and punish tax evaders.”
Much of the concern over tax avoidance has focused on big companies that operate legally within the tax system to minimise what they pay.
“Countries should change rules that let companies shift their profits across borders to avoid taxes, and multinationals should report to tax authorities what tax they pay where,” said the statement.
On Saturday, Prime Minister David Cameron strengthened his hand by securing a commitment from Britain’s overseas territories, including financial centres such as Bermuda and Jersey, to promote transparency and the exchange of information between tax jurisdictions.
The declaration, which came after talks on financial policy on Tuesday, also called for greater transparency on corporate ownership.
“Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily,” it said.
Cameron had made tax, trade and transparency – the so-called “Three Ts” – a key focus of the G8 summit, which was otherwise dominated by the conflict in Syria.
After on Monday announcing the launch of negotiations next month for a crucial EU-US free trade pact, the focus turned on Tuesday to the other two “Ts”.
In their final summit statement, the leaders agreed measures to share information internationally and to each publish national “Action Plans” on corporate ownerships and trusts used to avoid taxes.
The White House published its action plan at the summit, committing it to push for “comprehensive legislation” on identifying company ownership information.
The G8 push follows an initiative last year by the United States and five European countries to begin moving in this direction by drafting a model agreement on sharing banking information based on a 2010 US law.
It obliges all banks automatically to provide US authorities with all information they hold concerning all assets owned by US taxpayers, instead of upon request as was previously the practice.
In a setback for transparency efforts however, Swiss lawmakers on Tuesday refused to bow to pressure to approve a deal with the United States exposing US tax dodgers with assets in Swiss banks.
Lawmakers refused for the second time to hold an emergency debate on the “Lex USA” deal, which Washington has demanded must come into force by July 1.
The deal is seen as crucial if Swiss banks are to escape the threat of a raft of lawsuits in the United States, as well as being barred from the profitable American market.
Campaign group Global Witness hailed the agreement but said more needed to be done.
“Anonymous shell companies are the getaway car for crime and corruption: the G8 haven’t taken away the keys yet, but they are starting to let down the tyres,” the group’s directory of campaigns, Gavin Hayman, said
“For the first time the world’s leading economies have made progress towards ending corporate ownership secrecy.”
The G8 brings together the world’s leading industrialised countries – Britain, Canada, France, Germany, Italy, Japan, and the United States – and Russia.
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