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
    +1

    Comment number 95.

    I'll believe Cameron on tax evasion when he and his ministers are willing to admit to the house whether they personally benefitted from the 5p tax cut.
    As to not wearing ties. It doesn't make it look as if they're down with the masses. It just gives protesters less to grab hold of if they get in.

  • rate this
    +2

    Comment number 94.

    What was actually needed was tax reform that tied taxation to the public value collected by an individual or organisation. This would be unavoidable as the individual has to pay to get at the public value. This reform would also have stopped the housing bubble in its tracks and prevented the so called 'banking crisis'. What we get instead is loss of control of our tax system. We did 'ask' for it.

  • rate this
    -2

    Comment number 93.

    What I don't get about all this is - why pay for a Swiss bank account, when if you live and work in Florida, for example, or Dubai, there is no corporation tax and no income tax.

  • rate this
    +2

    Comment number 92.

    77. JPublic

    "legal" is such a subjective word when it comes to tax avoidance used in sickening contempt by the rich & wealthy

    On the contrary. It's an entirely objective term. Either it's legal or it's not. Period.

    Agree some things are legal which probably shouldn't be. That's the real issue.

  • rate this
    +1

    Comment number 91.

    60.Jack Napier
    49.David Horton
    --
    I do rather like the idea of electing someone who is double hard, to have a proper punch up to decide foreign disputes.

    But yeah, I don't think you need to be trained killer to stand up to Cameron. The man is flimsy.

    If we had a punch-up diplomacy, I'd want to be represented by Sir Ranulph Fiennes or Col Tim Collins

  • rate this
    +2

    Comment number 90.

    @27 "expect everything to get more expensive"

    Not necessarily. Many prices are set to reflect what people will pay, rather than what things cost. Part of the problem is that more taxes are dodged, the more the social safety net erodes, the poorer people are... the lower prices have to be, the more taxes are dodged... a downward spiral. Let us hope that they follow through.

  • rate this
    +3

    Comment number 89.

    "Me Me Me" - that's all I hear from the anti-tax brigade.

  • rate this
    -3

    Comment number 88.

    Throughout G8 Putin has looked like a sulking teenager who has been made to go on the family holiday with Daddy and his new boyfriend

  • rate this
    +1

    Comment number 87.

    @62.View_Germany
    "Why doesn´t David say anything about the UK spying our scandal at the G 20 summit 2009 in London?"


    Probably first needs to find out why Gordon Brown and D. Miliband authorised it.

  • rate this
    -12

    Comment number 86.

    "77.JPublic
    As is vile & immoral tax avoidance as it robs..... the potential of lowering taxation on all of us."

    Ha ha.

    What you're saying is that you want other people to pay more tax so you can pay less tax.

    And you call THEM greedy?!

    Ha ha.

  • rate this
    +3

    Comment number 85.

    If you're a tax avoider, don't think of it as "tax avoidance".....think of it as a children's hospital, buying you a new car.

  • rate this
    +1

    Comment number 84.

    Considering many of these politicians most likely use these tax avoidance schemes and offshoring systems I will believe this if and when it actually happens.
    I won't be holding my breath.
    In fact didn't Camerons dad make his money from setting up and using these schemes.

  • rate this
    -10

    Comment number 83.

    Is lapdog Britain an equal partner with Russia and America or something? Where are the Israelis? They're in charge of it all anyway, of course you're not supposed to say that, you might upset this new breed of Euro fascist who loves Israel.

  • rate this
    -3

    Comment number 82.

    47. Are you happy to be paying more tax, to make up the shortfall caused by corporate offshoring ?
    ---
    Taxation doesn't work that way. The Treasury don't decide what to spend, then work out how to raise it. They raise whatever they can and then work out how to spend it.
    Let's not kid ourselves that reducing avoidance will lower personal taxes - the extra revenue will get spent elsewhere.

  • rate this
    +3

    Comment number 81.

    Does this agreement include ex prime ministers who salt money away in blind accounts lodged heaven knows where?

  • rate this
    +1

    Comment number 80.

    The G8 is supposed to be a forum of eight of the twelve wealthiest nations in the world. When did the EU become a world nation, and why do they require two representatives when each proper nation would appear to have only one?

  • rate this
    -5

    Comment number 79.

    To run a company and break even on costs you need to be making 3x the salary of any employee. I feel that employers in general are extremely responsible people who take huge risks. The message I am getting from this spin is that employers aren't due respect or confidence for all that they do. If government and public sector were smaller then we need not punish these bright people. Parasitic worms!

  • rate this
    +4

    Comment number 78.

    If Cameron stopped giving away 12bn a year in do called foreign aid then maybe he wouldn't have to hammer us all with tax.Do the country a favour Cameron and resign.

  • rate this
    +2

    Comment number 77.

    55AndyC555
    I'm pleased the G8 are clamping down on tax evasion"

    As is vile & immoral tax avoidance as it robs communities, NHS, police, schools and a plethora of other social services of income not to mention the potential of lowering taxation on all of us.

    "legal" is such a subjective word when it comes to tax avoidance used in sickening contempt by the rich & wealthy

  • rate this
    +4

    Comment number 76.

    Only the people who let this happen can change it - the politicians.
    But will they? 'Apart from natural catastrophe, all the bad things that happen to mankind are caused by politicians.'

 

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