Chancellor of the Exchequer George Osborne is using this weekend’s G20 meeting of Finance Ministers in Moscow to secure the next stage of a new global standard to tackle tax evasion and avoidance, building on the groundbreaking agreement at the G8 last month.
Under Britain’s chairmanship, the G8 group of advanced economies backed a new global standard, underpinned by reformed rules, greater transparency and automatic information sharing; the next step is to take this approach to the emerging economies in the G20.
The Chancellor has jointly launched a new report from the Organisation for Economic Cooperation and Development (OECD) on the first day of the G20 finance ministers’ meeting Friday 19 July.
The report sets out a roadmap for new rules to tackle tax avoidance and address so-called base erosion and profit shifting, or BEPs.
This is where some multinational businesses avoid paying some taxes by shifting profits away from the location where the activities creating those profits take place.
The Chancellor has specifically welcomed the OECD’s proposals to create a dedicated taskforce to analyse the digital economy and its effect on profit shifting and propose action to tackle this.
He also welcomed their plan to develop rules to prevent profit shifting through the movement of money around a multinational group’s global structure to ensure that profits are more closely aligned with the activity that generates them.
The OECD has said that they will develop rules to require multinational corporations to report information to the tax authority of every country in which they operate on the tax they pay in each country, as recommended by the G8 under UK chairmanship last month.
The Chancellor announced that the UK, France and Germany are to provide an additional €400,000 to the OECD in further support of its work to reforming the global rules on the taxation of multinationals.
The funding will pay for additional resource needed to progress the work to the ambitious timetable set out in the OECD’s action plan.
The Chancellor commented:
Today’s report from the OECD, which Britain jointly commissioned last year, is a major step forward towards a global tax system that is fair and fit for purpose for the modern economy.
The next stage it to take this action plan and convert it into concrete reality.
Our message is clear: everyone must pay their fair share of tax.
On the second day of the G20 finance minister’s meeting - Saturday 20 July - the Chancellor will be the lead speaker at the G20 Ministers’ session on tax. He will use this as an opportunity to call for all G20 countries to support taking forward the OECD recommendations.
Photo by Alan Cleaver on Flickr. Used under Creative Commons.