BEPS: G20 leaders mark ‘significant progress’
G20 leaders have made “real progress” towards ensuring that “big companies pay the tax they owe”, David Cameron said at the end of the G20 summit in Brisbane yesterday.
“There are now over 92 different countries and tax authorities properly sharing information and, as the OECD set out at this G20 meeting, the action we’ve already taken has resulted in $37bn of extra tax being paid by big companies,” the prime minister said.
“The more we can make sure that big corporations pay their taxes properly, the less we have to tax hard working people who I want to make sure keep more of their own money to spend as they choose.”
The G20 leaders said in a communiqué: “We are taking actions to ensure the fairness of the international tax system and to secure countries’ revenue bases. Profits should be taxed where economic activities deriving the profits are performed and where value is created.”
They welcomed the “significant progress” made towards implementing the G20/OECD base erosion and profit shifting (BEPS) action plan and committed to “finalising this work in 2015”.
This would include “transparency of taxpayer-specific rulings found to constitute harmful tax practices”.
They also welcomed “progress being made on taxation of patent boxes” and endorsed the global common reporting standard for the automatic exchange of tax information (AEOI).
“We will begin to exchange information automatically with each other and with other countries by 2017 or end-2018, subject to completing necessary legislative procedures. We welcome financial centres’ commitments to do the same and call on all to join us.”
Developing countries
The communiqué added: “We welcome deeper engagement of developing countries in the BEPS project to address their concerns. We will work with them to build their tax administration capacity and implement AEOI. We welcome further collaboration by our tax authorities on cross-border compliance activities.”
Last week, ahead of the Brisbane summit, the OECD published a “strategy for deepening developing country engagement” in the BEPS project. Tax campaigners insist, however, that not enough is being done to reduce the impact of tax avoidance and evasion on developing countries.
Oxfam International’s executive director, Winnie Byanyima, said yesterday: “We welcome the G20’s commitment to and progress on cracking down on tax dodging by multinationals, but what’s on the table currently is not enough to stop poor countries being bled dry.
“Despite the best efforts of the OECD, most developing countries are still excluded from decision-making on global tax issues. Luxembourg, a tax haven, is part of the negotiations around reform of global tax rules, but Sierra Leone – where Ebola is raging and tax incentives for six multinational companies are the equivalent of eight times the health budget – is not. This is not fair.
She added: “Oxfam is now calling for a Global Tax Summit, where all countries participate equally in deciding fair tax rules for all.”
Income tax cuts
Speaking on the margins of the Brisbane summit, David Cameron insisted that a future Conservative government would cut income tax despite concerns about whether cuts are affordable, the Financial Times reported.
The paper quoted the prime minister as saying: “I’m a tax cutter and I want to see taxes cut in the next parliament.”
