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
    +4

    Comment number 35.

    To my mind we could do a lot to pin down companies who avoid tax through elaborate offshore schemes. It would need some detailed thinking out/legal safeguards but we need to enshrine something within VAT rules that prevents a company from reclaiming INPUT tax if it is "hiding" its profits.- they cannot have it both ways.

  • rate this
    +2

    Comment number 34.

    So lads..thats one load of BS passed out as policy..now..where can we hide our money !!!??well mr pres I hear Guams a nice little place..and we would never let the natives back in !!! So that's decided then..we and the bilderbergs will move all our cash there then...unless ossie can come with any thing better ?? er sorry pres ..can we give that a miss !!

  • rate this
    0

    Comment number 33.

    Good old politicians - only thing they like to do is spend everyone's money. Focus on the corporates - takes the spotlight off the rich individuals so donations to parties can be protected. Just looking after their own.

  • rate this
    +35

    Comment number 32.

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

    Not if you don't act on it. How many convictions at HSBC?

  • rate this
    +46

    Comment number 31.

    Well done Dave! But the problem was "avoidance" not evasion.

    Do you know the one about the organisation of merriment in a brewery?

  • rate this
    +1

    Comment number 30.

    FINALLY THIS ISSUE IS BEING ADDRESSED!

    95% of most big corporations revenue goes through these loop holes.....The amount of money this could provide to governments globally is immense. Better than any tax rise or job cut.

    Time for the big companies to pay there share!

    Those "clever accountants" can go to hell.

  • rate this
    +3

    Comment number 29.

    A Prime Minister who isn't even prepared to disclose His own income and how much He has personally benefited from His own Government's tax changes, with a chancellor whose family fortune is kept in the tax haven Cayman Islands paying no tax at all has no credibility when arguing for Tax Transparency.

  • rate this
    +1

    Comment number 28.

    They're idiots if they think big business is going to pay more taxes without fighting it tooth and nail. My money is on the evaders, businesses can afford to employ clever people whereas our politicians are normally not very bright - ex Eton or not. The clever ones will win.

  • rate this
    -6

    Comment number 27.

    expect everything to get rapidly more expensive as corporations try to claw back their profits...

  • rate this
    +88

    Comment number 26.

    The big corporations in the right 'club' will still evade or minimise the taxes they pay. I expect these measures will make it easier to prosecute mid-sized businesses who've found creative ways to reduce their tax.

    Banks will continue to get away with financial mega crimes.

  • rate this
    +3

    Comment number 25.

    5Daniel
    That's right Cameron, this is far more important than child grooming gangs, high petrol prices, housing shortages, mass unemployment, mass immigration, and a recession. You the man!

    Actually it is! Significantly increased tax revenues will allow us to lower unemployment, lower fuel tax, deter immigration by tax staying in poor countries, build houses.. Oh & FYI the UK is not in recession

  • rate this
    -2

    Comment number 24.

    Are they trying to do a Mexican wave?

  • rate this
    +27

    Comment number 23.

    Words mean so little, especially coming from these 3.

  • rate this
    -4

    Comment number 22.

    Tax evasion will never be eradicated. Sovereign countries have the right to decide and implement any tax regime they please. Many countries have made a business out of tax evasion! They don't have natural resources, nor manufacturing and are too small to generate adequate national revenue any other way apart from tax (evasion). These G8 measures are pointless, going nowhere!

  • rate this
    +1

    Comment number 21.

    really this wont stop any individuals or companies dodging or legally avoiding their taxes just look to the government front bench almost to a man they are or have recently be a party to tax avoidance all completely legally ofcourse .The government could easily stop internet gambling sites trading from outside the UK the USA does billions lost to gambling sites donation anyone

  • rate this
    +1

    Comment number 20.

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


    Best news I've heard all year.

  • rate this
    -2

    Comment number 19.

    @7. naughty rabbit
    Well done G8"

    Why wasn't this done a G20??

    This is the smokescreen. I fear tax avoidance is still with us.

  • rate this
    +1

    Comment number 18.

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

  • rate this
    +2

    Comment number 17.

    #5 If the govt can get the correct amount of corporation tax into the coffers there might be less need to slap even more tax on petrol? (PS good luck getting Putin to agree to lower oil prices! Where do you think his $100M personal fortune comes from?)

  • rate this
    0

    Comment number 16.

    Yes, they've all agreed to give enough time for Cameron's mates to move their money somewhere else.

 

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