Finance ministers of the G20 group of nineteen leading developed and emerging economies, meeting in Cairns, Australia, at the weekend, confirmed their support for the interim global corporate tax proposals that were published last week by the Organisation for Economic Co-operation and Development (OECD). Meanwhile in an illustration of the rapid pace of change that have naysayers reeling, Ibec, Ireland's top business lobby group, has urged the Government to take pre-emptive action to scrap the 'Double Irish Dutch Sandwich' scheme, the main legal arrangement used in Ireland by American companies to avoid global corporate taxes - as with the property bubble Finfacts has moved from being an outlier to being part of the new conventional wisdom.
Ireland will retain several advantages in attracting FDI (foreign direct investment) and the biggest risk is that policy makers continue to believe their own propaganda/spin and do not seriously recognise the challenges as well as the opportunities - - most Irish Government reports are typically full of platitudes and aspirations with little if any space for acknowledgement of weaknesses.
Joe Hockey, Australian treasurer, at the weekend in Cairns said the attempt to tackle global tax evasion by multinational companies has met an "extraordinary effort" by global finance ministers, with tax regimes about to experience "structural reform at a global level."
According to The Sydney Morning Herald, Hockey said the OECD and the G20 had made an "extraordinary effort" to clamp down on global tax avoidance by multinational corporations in recent months by delivering half of the promised actions from its base erosion and profit shifting (BEPS) action plan.
As part of the G20's efforts to crackdown on global tax evasion, Hockey said finance ministers had agreed to introduce a 'common reporting standard' so the Australian Tax Office knew when someone opened a bank account anywhere in the world.
The G20 finance minister and central bank governors' meeting in Cairns concluded on Sunday, with Hockey saying G20 finance ministers are now 90% of the way towards meeting a 2% target for additional global growth.
This year has been marked by remarkable progress against international tax evasion and corporate tax avoidance.
For example Austria and Luxembourg had held up an amendment to the EU’s savings directive for six years to protect banking secrecy and then in 2014 they agreed to sign an OECD protocol on automatic exchange of bank information.
The Algirdas Šemeta EU tax commissioner said last March:
Switzerland would never amend its 1934 bank secrecy law was the conventional wisdom!
More than 65 countries and jurisdictions have already publicly committed to implementation of the OECD’s standard, while more than 40 have committed to “a specific and ambitious timetable leading to the first automatic information exchanges (AIE) in 2017.”
AIE is very important because the existing system that applies in many countries is that foreign tax authorities have to apply for information on a case-by-case basis.
Many are shocked by the progress and the OECD will publish its final proposals in a year.
Political gridlock in Washington DC will not stall progress.
OECD BEPS Project submission from Finfacts: Ireland should embrace corporate tax reform - - includes analysis of underperforming indigenous tradable sector.
© Copyright 2011 by Finfacts.com