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
    0

    Comment number 575.

    In “Occupying Chairlifts” on youtube, a simple rule tweak on inheritance ends up changing the direction and purpose of modern human life! Here’s a fair way to transition forward, something specific we can demand, protest for, and adopt ourselves! Spread it? Watch “Occupying Chairlifts” on Youtube! http://www.youtube.com/watch?v=q0l36xpEIBc

  • Comment number 574.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 573.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 572.

    @565 - I agree librarians do a lot of charitable work, but less of them cus of cuts, due to reduction in corporate tax base. Have to buy books from Amozon rather than borrow.

    Oh sorry - 'libertarians'!

  • rate this
    0

    Comment number 571.

    @566.U R RIGHT,
    I would put it to you and other pro-tax socialists, that if you all really care about the poor then we needn't worry as your sentiments are proof that there will be enough voluntary donations to support them.
    On the other hand if you don't care about the poor then you are in no position to mandate that others pay for them via coercive taxation.

  • rate this
    -1

    Comment number 570.

    Just keep banking in Uruguay and you'll be fine

  • rate this
    +1

    Comment number 569.

    EU Observer ~ Switzerland’s lower house of has stalled a tax-evasion deal with the US.

    Banks will not reveal client names, but give a one-year window to hand over information of third party accountants and tax lawyers, sufficient for to identify tax dodgers.

    The law was passed by the upper house of parliament, but the lower house is refusing to discuss it as a matter of principle.

  • rate this
    +2

    Comment number 568.

    RE 566----well that says it all doesn't it LOL

  • rate this
    +2

    Comment number 567.

    #129 You argue if these companies get taxed prices would rise so ordinary people would pay in the end. Really! Do you pay to use Google? And you do realise the tax these companies doesn't pay is collected as higher taxes from you already? Even if prices did go up (doubtful) you have the choice whether to buy things, but not whether to pay tax.

  • Comment number 566.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +2

    Comment number 565.

    @563.U R RIGHT,
    Libertarian doesn't automatically equate to selfish. Libertarians can still engage in voluntary charity which a noble act regardless of political viewpoint. Libertarians are just against coercive taxation which by it's mandatory nature is a carte blanche for the government to squander such money as no one can refuse payment on account of said squandering.

  • rate this
    +1

    Comment number 564.

    All Governments (140+?) by agreement should pass laws governing international matters. But money buys power, influence and more money, whether multinationals, media moguls, financial institutions. The 5 billion individuals who inhabit the planet are taken for a ride, devil take the hind most. They should have a say, to do that need a fair use of resources and tax recycling of money is only way

  • Comment number 563.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +3

    Comment number 562.

    @559.U R RIGHT,
    Depending on the kinds of margins Amazon runs, their only alternative might be to increase the efficiency of operations so they can employ far fewer people albeit on an improved wage. Still the other laid off crowd wont be too happy.

    As for your landlords argument,.. a lot of government regulations will be responsible for the landlords increased costs like rezoning, VAT, e.t.c.

  • rate this
    +1

    Comment number 561.

    So shareholders get lower dividends because tax that's due is paid. I'm a low earner and pay all my taxes so have no sympathy whatsoever. It enrages me to know these multinationals have got away with this for so long. Any misfortune that befalls those that gain from this practice is well deserved. Let's hope the changes are introduced ASAP, preferably back-dated.

  • rate this
    +3

    Comment number 560.

    @557.PacificIsland,
    Neither should run the World. At most, elected governments should run the countries in which they were elected and nowhere else, though I'm more for the sovereign individual. In any case, more countries the better as oppose to massive federal superstates. At least many countries need to create free environments to attract people whereas superstates leave you nowhere to run to.

  • Comment number 559.

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

  • rate this
    -2

    Comment number 558.

    You call it tax evasion....I call it not funding terrorism !

  • rate this
    +2

    Comment number 557.

    It’s a question about who should run the world; lobbing amoral multinationals or elected national governments (however flawed)? In a democracy the Government’s morality is a reflection on you. This is a small move in the right direction?
    No ties: - to confuse Julia Gillard, who takes ‘blue ties’ as a primary sexual characteristic.

  • rate this
    +4

    Comment number 556.

    @ 554.U R RIGHT
    In which case lambasting Amazon would probably just serve to eliminate all those jobs in the massive distribution centers. What then,??.. several thousand more unemployed due to socialist begrudgery. Amazon would then just relocate to an economically freer location and distribute from there directly to customers, like I said perhaps using drones, to also bypass customs and duty.

 

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