G8 Leaders Agree To Crackdown On Tax Evasion
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The leaders of eight of the world’s biggest economies on Tuesday struck a deal to “fight the scourge of tax evasion” – such as Google, Amazon and Starbucks – that rob government coffers of billions of dollars each year.
The leaders of eight of the world’s biggest economies on Tuesday struck a deal to “fight the scourge of tax evasion” – such as Google, Amazon and Starbucks – that rob government coffers of billions of dollars each year.
G8 leaders yesterday signed a 10-point Lough Erne Declaration that calls for tax authorities around the world to automatically share tax information and urged countries around the world to change the rules that allow multinational companies shift profits across borders to avoid taxes and require them to report “what tax they pay where”.
“Tax authorities across the world should automatically share information to fight the scourge of tax evasion,” the G8 leaders said in a statement.
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.
Much of the concern over tax avoidance has focused on multinational companies such as Apple, Google and Starbucks, which manipulate tax systems to minimise what they pay.
Related: Apple Accused of “Highly Questionable” Tax Avoidance
Related: Ireland Rejects Blame for Apple’s Tax Evasion
Calling for a new global tax standard, G8 leaders called on the Organisation for Economic Co-operation and Development to draft a template for multinationals to report profits and tax payments to authorities on a country-by-country basis.
According to UK Prime Minister David Cameron, this would help “identify where multinational companies are earning their profits and paying their taxes so we can track and expose those who aren’t paying their fair share”.
“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 Cameron, who has sought to clamp down on secret flows of money, making it a centrepiece of his presidency of the G8 this year.
Related: Tax Avoiders Should be Named and Shamed, Says UK Watchdog
Related: Singapore to Crack Down on Cross-Border Tax Cheats
The G8 push follows an initiative last year by the United States and five European countries to begin moving in this direction by drafting a model agreement on sharing banking information based on a 2010 U.S. law.
It obliges all banks automatically to provide U.S. authorities with all information they hold concerning all assets owned by U.S. taxpayers, instead of upon request as was previously the practice.
