G8 leaders agree tax evasion measures

 

David Cameron; "You have to collect the taxes that are owed. That is only fair for companies and for people who play by the rules"

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Leaders of the G8 major economies have agreed new measures to clamp down on money launderers, illegal tax evaders and corporate tax avoiders.

Governments agreed to give each other automatic access to information on their residents' tax affairs.

They will also require shell companies - often used to exploit tax loopholes and invest money anonymously - to identify their effective owners.

The summit communique urged countries to "fight the scourge of tax evasion".

G8 facts

  • Informal, exclusive body aimed at tackling global challenges
  • Established in 1975 in Rambouillet, France
  • Original members: France, Germany, Italy, Japan, UK, US
  • Later members: Canada (joined at 1976 summit, San Juan, Puerto Rico), Russia (joined at 1998 summit, Birmingham, UK)

The measures are designed to combat illegal evasion of taxes, as well as legal tax avoidance by large corporations that make use of loopholes and tax havens.

The summit in Northern Ireland also saw the launch of free trade negotiations between the EU and US, which UK Prime Minister David Cameron, who was hosting the summit, dubbed "the biggest bilateral trade agreement in history".

Tax, trade and transparency - dubbed "The Three Ts" - were placed at the top of the UK's agenda for its presidency of the G8, which consists of the UK, US, Germany, France, Italy, Russia, Canada and Japan.

But the summit has been overshadowed by the conflict in Syria.

The G8 leaders - including Russian President Vladimir Putin, an ally of Syrian leader Bashar al-Assad - backed calls for Syrian peace talks to be held in Geneva "as soon as possible".

Mr Cameron said the leaders had managed "to overcome fundamental differences", but no timetable for the Geneva talks was given, and the statement made no mention of what role Mr Assad could play in the future.

Shadowy arrangements

Leaders agreed that multinationals should tell all tax authorities about what taxes they pay and where.

"Countries should change rules that let companies shift their profits across borders to avoid taxes," the communique said.

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It follows revelations about the ways in which several major firms - including Google, Apple, Starbucks and Amazon - have minimised their tax bills.

Illegal activities, including tax evasion and money laundering, will be tackled by the automated sharing of tax information.

Ahead of the summit, the Organisation for Economic Co-operation and Development (OECD), proposed to share tax information by building on an existing system set up by the US and five major European economies, but on a global scale.

"This international tax tool is going to be a real feature of ensuring that we get proper tax payment and proper tax justice in our world," said Mr Cameron, who claimed that it meant "those who want to evade taxes have nowhere to hide".

The OECD includes all of the G8 members except Russia.

Among the information to be shared will be who actually ultimately benefits from the shadowy shell companies, special purpose companies and trust arrangements often employed by tax evaders and money launderers.

Earlier in the day, Chancellor George Osborne unveiled plans for a UK register of companies and their owners.

The White House also announced a similar plan for the US.

Last week the UK also unveiled a deal with its crown dependencies and overseas territories - including the Channel Islands, Gibraltar and Anguilla - to start sharing more information on which foreign companies bank their profits there.

About a fifth of offshore tax havens, which are used by multinationals to shelter cash from the tax authorities, are British dependencies.

"Of course Britain's got to put its own house in order," said Mr Osborne, adding that the government would launch a consultation on whether the register should be published or just be available to the HMRC.

Speaking during the summit, Mr Osborne said more progress had been made on reforming the global tax system in the past 24 hours than the "past 24 years".

Conflict zones

The G8 communique also demanded more transparency from mining firms.

It follows revelations that many major mining companies use complex ownership structures in the Netherlands and Switzerland to avoid paying taxes on the minerals they extract in developing countries.

"Developing countries should have the information and capacity to collect the taxes owed them," the communique said.

"Other countries have a duty to help them."

The governments agreed that mining companies should disclose all the payments they make, and that "minerals should not be plundered from conflict zones".

"We agreed that oil, gas and mining companies should report what they pay to governments, and that governments should publish what they receive, so that natural resources are a blessing and not a curse," said Mr Cameron.

Ransom crackdown

The G8 leaders also agreed to stamp out ransom payments to kidnappers for the release of hostages.

Mr Cameron said tens of millions of dollars in ransom money had been paid around the world in the last three years.

UK government officials have often expressed their frustration at alleged ransom payments being made to secure the release of French, Italian and other European hostages seized in the Sahara and elsewhere, says the BBC's Security correspondent Frank Gardner.

But since those governments have never publicly owned up to paying ransoms this G8 agreement may be easier to sign than to enforce, he adds.

 

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  • rate this
    -8

    Comment number 55.

    "18.Smuggy C555

    Oh dear. Sally and Andy C555 won't be happy !!!"

    Can't speak for Sally but it doesn't bother me.

    My clients have always paid all tax legally due and will carry on doing so. Doesn't everyone?

    I'm pleased the G8 are clamping down on tax evasion. Jolly nasty business that.

  • rate this
    +22

    Comment number 54.

    No measures here to prevent tax avoidance - only transparency to detect evaders (who will outsmart any new measures).
    We don't need transparency to detect avoiders - we already know who they are and how they're doing it. What is needed is multilateral agreements to amend taxation laws to prevent abusive use of debt funding and dubious transfer pricing.
    But I bet they had a nice lunch.

  • rate this
    0

    Comment number 53.

    Waste of time!

  • rate this
    +55

    Comment number 52.

    It was the simplifying of tax rules that was needed.

    If you notice, there is more emphasis on tax evasion than on tax avoidance yet the latter sees 10's of bi££ions in tax avoidance in the UK each year.

    I fear deliberately little progress on tax avoidance has happened here & the public have been hit with yet another smoke & mirrors deception.

  • rate this
    +1

    Comment number 51.

    Why can't they do something useful and entertain us by having a 3 way fight contest. Putin is the smallest, but has the advantage of being a man. I think he would win.

  • rate this
    0

    Comment number 50.

    As a vaguely lefty ex Labour supporter I'm surprised at the cynicism here. These efforts could potentially make a huge difference to some very needy people. Sure, you will never close all loopholes but this at least in tone sets out a path to follow when dealing with the multinationals.

  • rate this
    -1

    Comment number 49.

    Putin looks a bit weedy next to Cam & Obama.

  • rate this
    -4

    Comment number 48.

    24. PaulB
    4 MINUTES AGO
    Are they trying to do a Mexican wave?
    --
    It's probably the pig flying by.

  • rate this
    +1

    Comment number 47.

    Are you happy to be paying more tax, to make up the shortfall caused by corporate offshoring ?

    Meanwhile, said corporates with premises in the UK benefit from our infrastructure, policing etc.

    I call that theft.

  • rate this
    +8

    Comment number 46.

    There is a massive loophole within the EU which I don't see how they can cloe.
    The EU allows for free trade within Europe but all the countries have different rates of tax. So all the big companies base themselves in the country with the least tax and then trade freely from there throughout the EU.
    The only way to prevent this would be to have a more federal EU, but I can't see that happening.

  • rate this
    +1

    Comment number 45.

    I'll believe it when I see it happen.

  • rate this
    +10

    Comment number 44.

    Look, I don't pay a penny more tax than I have to, and I don't suppose you do either. The reason I pay is because I'd get in trouble with the law if I didn't. The idea that big corporations should pay take out of a moral urge, out of the goodness of their hearts, is ridiculous. If they're avoiding tax illegally they should be prosecuted. End of!

  • rate this
    +2

    Comment number 43.

    What a damp squib.

    Automatic sharing of information will lead to HMRC suffering information overload.

    No issues with transparancy of ownership (although will be interesting to implement for UK trusts).

    As for shifting profits across borders there will be no change in the law. Transfer pricing rules already deal with this point. The problem is politicians do not understand the rules

  • rate this
    +1

    Comment number 42.

    Does anyone really believe Google and Amazon are now willingly going to pay their fair share of the taxable liabilities owed ? More likely they'll find other ways to earn Billions in the UK and pay next to no tax here. This whole scheme depends upon voluntary cooperation and it's not going to happen whilst there are so many loopholes and no sanctions against profitable tax dodging businesses ..

  • rate this
    0

    Comment number 41.

    Are you sure you haven't shown a picture of boy band G4?!

  • rate this
    +2

    Comment number 40.

    Multinationals can avoid (or rather, defer) Corp Tax with impunity.
    Local companies cannot, so are at a disadvantage.

    There is only one solution.
    Abolish corporation tax. It is ultimately paid by the consumer anyway.

  • rate this
    +2

    Comment number 39.

    The ideas put forward will not work.

    We are not dealing with tax avoidance or tax evasion; we are dealing with multi-national companies that choose to pay tax where and however they want to; anyone who thinks that national governments can stop that is an idiot - it is plainly impossible.

    The only people that can stop this are citizens who choose not to use companies that pay tax elsewhere.

  • rate this
    +1

    Comment number 38.

    Good old G8 leaders thumping their fists while being a little keen on tax avoidance themselves...

    Pot, kettle, black?

  • rate this
    0

    Comment number 37.

    Rhubarb....

  • rate this
    +77

    Comment number 36.

    Did the banks get any more honest or accountable after 2008?

    I rest my case.

 

Page 27 of 29

 

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