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
    +2

    Comment number 275.

    NO CHANCE! Hardly any tax is collected in Russia which is still like a fronter state,lawless,Tory's receive massive donations from banks and big business,they're hardly going to bite the hand that feeds them and don't forget,they where the architects and drivers of bank deregulation(and accused Lab of OVER REGULATING!) arguing that money should be able to move with no check,it was called Big Bang

  • rate this
    -1

    Comment number 274.

    Tip to "leaders": Simplify the tax laws.

    I am working in Italy, providing services from a UK company, and my family live in Germany. I have three sets of accountants from each country, 2 months after I started, unsure where I (and the company) will be paying tax. I was double taxed in 2007 by Switzerland and Germany, and borrowed at 26.9% to pay both. Still awaiting payback - 5 years on.

  • rate this
    +1

    Comment number 273.

    The tax code of most countries is incredibly complicated which allows corporate tax lawyers to identify loopholes.Small and medium size businesses, not able to hire a gaggle of lawyers, end up paying the revenues demanded by government because they are easy targets.I hope the G8 agreements will be implemented so that corporates pay their fair share of the tax burden which should benefit everybody.

  • rate this
    +4

    Comment number 272.

    How about we start off by removing all MPs who have profited from tax avoidance and/or evasion?
    We'd pretty much need an entire new government and that's starting to look like a good idea.

  • rate this
    +2

    Comment number 271.

    I've had it to here with those British dependencies hiding behind our flag of convenience but refusing us the right of abode.

    If I were Cameron I'd give them an ultimatum. Get our flag off your flag or let British people come and live there.

    The French don't put up with that nonsense in Guadeloupe or Martinique or Reunion or Tahiti.

  • rate this
    +1

    Comment number 270.

    If they make money here they should pay taxes here. Otherwise don't allow them to do business.

  • rate this
    0

    Comment number 269.

    That contract Cameron held up must have been signed by all the Leaders in erasable ink because none of them will hold true to it, especially Putin who with his Autocrats & Mafia nearly brought Cyprus to it's knees, & Cypriots know it all too well. Also, the lawyers of big player company's worldwide even at this moment are thinking up fool proof ways how to beat any new thought up tax laws!

  • rate this
    0

    Comment number 268.

    264 comments, just about says it all.

  • rate this
    +1

    Comment number 267.

    mrrossy at 262 are you referring to the privatisation of the NHS that occurred under the Labour governments of Blair and Brown. if you are that is old news...and dishonest of labour supporters to deny....

  • rate this
    +1

    Comment number 266.

    Mr Obama & Mr Cameron have both stated that there is no role for Assad in Syria with so much of Syrian peoples blood on his hands? Mr Obama also said that as long as Russia keeps supplying weapons to Assad regime, then Assad will think he has license to carry on with the killing

    Mr Putin is very much odd one out here. He does not seem to see the horror of what he is doing? Genocide of a nation

  • rate this
    +1

    Comment number 265.

    It will not stop this...

    "Singapore's central bank has censured 20 banks for attempting to rig benchmark interest rates."

    Having had their wrists slapped over here (still no laws though) they are off to sunnier climates doing the same thing!

    Couldn't make it up could you. Why do we allow organised crime in our high streets?

  • rate this
    +2

    Comment number 264.

    What would be real progress is if they stopped begging corporations to throw in a little more after the press highlight the "injustice", and actually changed the laws so that their mates (for whom the loopholes were intended) also had to pay fair tax.
    If you purposely leave a loophole, all companies owe it to their shareholders to use it.

  • rate this
    +3

    Comment number 263.

    Whilst it is not illegal for these cooperation to use aggressive tax evasion methods then they will continue to do so. Close all the loopholes seems a basic requirement. Why don't they do it, could it be that there are to many vested intrests also making use of the loopholes?

  • rate this
    +5

    Comment number 262.

    Are we presumed stupid enough to believe Cameron is going to go after his tax-dodging elite friends because he says so? Poor poor journalism BBC. Until the BBC starts reporting things properly people will be misled in the same way as in its reporting of the NHS privatisation which is well underway.

    Sad times when a publicly funded organisation is supporting private interests.

  • rate this
    +15

    Comment number 261.

    If I want to transfer a £50 birthday gift to my nephew in Australia I have to fill in forms, pay £20 and agree to the government and whoever else they want checking if I am a terrorist laundering money.

    If companies transfer thousands of millions of pounds to other jurisdictions, George Osborne seems to know nothing about it.

    Why is this? It time the government stopped hassling the little man.

  • rate this
    +1

    Comment number 260.

    What's the phrase :- setting the lions to look after the lambs?

  • Comment number 259.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 258.

    Tremendous progress, towards all being able to work as able, freedom of speech, whistle-blowing a historical curiosity, security for all against illness & frailty, certainty of similar belonging of loved-ones, neighbours, fellow citizens, our fellow human beings. All it will take is the pursuit of transparency, the correction of anomaly, and oversight by a new race of highly-paid incorruptibles..

  • rate this
    +3

    Comment number 257.

    People being fair about their taxes ? The government should practice what they preach. They are anything but fair as they rob us blind with taxes on this, taxes on that, taxes on taxes, on taxes. :-(

  • rate this
    +2

    Comment number 256.

    Shame that economics overshadowed by Mid-East mayhem again.It was salutory to hear Putin,not excactly a likeable man,tell us openly that if we give arms to Syria rebels, we'll be arming some of the people who have the same views as those who murdered an innocent young man in Woolwich.Having to hear the truth from unlikeable Putin, when we should be told the same truism by OUR PM is infuriating !!

 

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