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 75.

    @annorax 44. Presumably you work in the country in which you pay tax? These multi-nationals trade in a country but pay their taxes in "havens". Often they have set up business with the use of grants, thus taking even more money out of the country.

    It's capitalism but not as Adam Smith described it. He warned of merchants and factory owners (eg Amazon). We should take heed of him.

  • rate this
    +17

    Comment number 74.

    The only way to do this is to flat tax every one and get rid of all of the silly tax allowances and breaks. Of course, this is also unfair so I suppose we will continue to watch the rich get richer at the disgustingly logarithmic rate that they have enjoyed for the past ten years.

  • rate this
    +19

    Comment number 73.

    So the G8 has a useful purpose after all.
    But just in case their plan doesn't work, I quite like the comment from :


    39.Helen Andrews
    ..The only people that can stop this [tax evading companies] are citizens who choose not to use companies that pay tax elsewhere.

  • rate this
    +1

    Comment number 72.

    After hour long negotiations between the members of the G8, it has been decided not to wear a tie today. Further negotiations are going on about the dress code for tomorrow.

  • rate this
    +20

    Comment number 71.

    Perhaps we are STUPID...

    The UK government recently used expert accountants to draw up tax laws, the accountants then returned to their firms with the full knowledge of the LOOPHOLE to use next.

    So is it a case of the next Loophole was agreed at the G8?

  • rate this
    +3

    Comment number 70.

    Multi-nationals choose to pay their tax anywhere but the G8 countries so what is the point of these "new" ideas?

    Not sure which is the biggest insult - multi-nationals that refuse to pay tax in the G8 or the leaders of the G8 thinking we are all completely gullible and stupid.

  • rate this
    +3

    Comment number 69.

    It looks like there must be a G8 uniform.Either that or they all sent their suits and ties to the launderers and they didn't send them back out of spitefulness.

  • rate this
    +2

    Comment number 68.

    The only substantive (and chilling) comment I saw in this was:

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

    Presumably no warrant or probable cause required - automatic. Or are they ratifying what the NSA and GCHQ are already doing?

  • rate this
    +45

    Comment number 67.

    More words from the Muppets running the show.

    Firstly, it's avoidance - not evasion. The governments make the rules, but as they are too incompetent to frame good laws they have to whine about people using the loopholes that they left.

    Secondly, you can't rely on 'doing the right thing' as MPs have shown time and again with their expenses - claiming to operating within the rules.(that they set!)

  • rate this
    +1

    Comment number 66.

    I'll believe it when I see it... sounds a load of hot air mixed with a bit of methane to me!

  • rate this
    +1

    Comment number 65.

    Oooo, look at us big men doing our job and looking for adulation while trying to look trendy by taking our ties off.

  • rate this
    -1

    Comment number 64.

    Tax evasion is rightfully illegal but tax avoidance isn't. Nobody in their right mind pays more tax than they have to. The biggest believers in high taxation are those on low income and/or receiving benefits. Tax payers want to give as little as possible spending their money how they wish. Anyway, don't think this will help. The cleverest minds are on the side of tax avoiders. QED.

  • rate this
    +2

    Comment number 63.

    This seems like a significant agreement, hopefully it will provide more stability for the economy?

  • rate this
    0

    Comment number 62.

    Why doesn´t David say anything about the UK spying our scandal at the G 20 summit 2009 in London?
    A diplomatic row with Russia and Turkey and others.
    David´s G 8 summit overshadowed by scandal!
    Hopefully they didn´t do so at this G 8?

    David is talking about "transparency", all we get is "no comment" by David about the spy scandal!

  • rate this
    +15

    Comment number 61.

    I'll reserve my celebrations until they actually recover some of that unpaid tax. All well and good sharing information, but we already know some big companies that get away with it and we let them off scott free. All the while public services suffer, the rich get richer and the poor get poorer.

  • rate this
    +39

    Comment number 60.

    49.David Horton
    Just now
    Putin looks a bit weedy next to Cam & Obama.

    -----

    & yet he's the only trained killer.

    I would post something about Putin's personal fortune & how he made it or how the Russian state is so riddled with corruption that I can't see them even attempting to tackle tax evasion.

    But I don't want to get irradiated.

  • rate this
    +17

    Comment number 59.

    Ok so the new measures will inform us how companies LEGALLY pay their taxes - yes through loopholes - but they have followed a law. What has this achieved? If your legal system enables persons (natural or legal) to legally pay a lower rate of tax - they will use it - why shouldn't they? If there are loopholes in the legislation - close them. Information gathering is not a solution.

  • rate this
    +2

    Comment number 58.

    "23.meagain

    Words mean so little, especially coming from these 3."

    Therein lies the problem. Does anyone still trust their government? Like the 1000s who protested in Portugal a few weeks back, and the dozens of poverty/Bedroom Tax/Disability protests in the UK, there's a curious silence on this:

    http://rt.com/news/mass-protests-continue-brazil-844/

    I remember when the BBC carried the news...

  • rate this
    0

    Comment number 57.

    This is one very expensive talking shop and that's all it is, lets just watch now to see where Gideon and his pals hide the cash from now on, they could have done this on a conference call via computer link.

  • rate this
    +1

    Comment number 56.

    All the money will now probably get moved to a new "bank" P O Box on the Chagos Islands where even the native Chagosians aren't allowed to live any more since we gave the islands to the US for use as a military base.

 

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