| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Global Economy Last Updated: Feb 16, 2013 - 5:10 PM


G-20 finance ministers back plans to tackle massive tax avoidance by multinational firms
By Michael Hennigan, Finfacts founder and editor
Feb 16, 2013 - 5:00 PM

Email this article
 Printer friendly page
On Friday, February 15, Vladimir Putin, Russian president, welcomed G-20 finance ministers and central bank governors to the Kremlin.

G-20 (Group of Twenty) finance ministers and central bank governors on Saturday at a meeting in Moscow backed plans to tackle massive tax avoidance by multinational firms.

"We are determined to develop measures to address base erosion and profit shifting, take the necessary collective action and look forward to the comprehensive action plan the OECD will present to us in July," the final communiqué said.

Germany, the UK, France and Germany have led a campaign at the G-20 meeting for an international clampdown on corporate tax avoidance which has significantly accelerated in the past decade.

A report this week by the OECD (Organisation for Economic Cooperation and Development), the Paris-based think-tank for 34 mainly developed countries, found that multinational companies used loopholes that allow them to pay no corporate taxes or as little as 5% in corporate taxes when smaller businesses are paying up to 30%

"The positive effects of globalization must not lead to multinational companies artificially shifting their profits and avoiding fair contributions to the tax revenues of our countries," Wolfgang Schäuble, German finance minister, said in Moscow on Saturday, according to Deutsche Welle, the German broadcaster.

George Osborne, UK chancellor, said multinationals must be forced to pay their fair share. They must, "like anyone else, pay the taxes they owe," Osborne said. "The global economy has changed massively over the last decade, but global tax rules have stood still for almost a century," he added.

“The economic context is now of a globalised world where there are more investment and capital flows and where new forms of business are developing especially in the area of digital economy,” said Pierre Moscovici, French finance minister. “We must ensure that this new form of business also pays its fair share and therefore we must avoid some situations in which some companies use international and domestic law to be taxed nowhere.”

George Osborne is expected to announce that Britain will chair a new transfer pricing group which will look at how to reform the system which allows profits to be diverted to parent companies or to lower tax jurisdictions, via royalty and service payments.

It is one of three groups set up by the OECD to look at the tax issues which will help the group prepare a "plan of action" to be put forward to the G-20 in July. Germany and the United States/France lead the other two groups which will look at how to determine tax jurisdiction, particularly in the context of e-trading.

With the rise of e-commerce, countries such as Ireland, the Netherlands and Luxembourg, have facilitated a huge increase in tax avoidance that was bound to trigger a reaction.

The UK is Google's biggest overseas market but when it reports a loss there, while it transfers all its UK end-user revenues to Ireland to pay an effective rate of 0.18% of revenues, it was bound to trigger outrage.

Amazon.co.uk, Britain's biggest online retailer, generated sales of more than £3.3bn in the country in 2011 but paid no corporation tax on any of the profits from that income -- and is under investigation by the UK tax authorities.

Regulatory filings by parent company Amazon.com with the US securities and exchange commission (SEC) revealed the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, and the investigation focuses on a period when ownership of the British business was transferred to a Luxembourg company.

The SEC filings, highlighted by Bookseller magazine, show that in three years, Amazon generated sales of more than £7.6bn in the UK
without attracting any corporation tax on the profits from those sales.

2012 report (see also Google's UK, French and Irish accounts data).

This Week: OECD calls for reform of global corporate tax rules

The American Chamber of Commerce in Ireland -- a unit of the US Chamber of Commerce, America's most powerful business lobby - - on Friday rejected the OECD report on corporate tax rules and claimed that Ireland's tax regime for multinational was 'fair, transparent and just.'

On transparency, among the biggest companies, Apple in Ireland has kept its accounts hidden since 2005; Intel Ireland is a branch of a Cayman Islands mailbox company and no financial data is released; Irish units of Pfizer, the world's biggest drugs company, are branches of a Dutch limited partnership; Microsoft also hides the financial of some of its Irish units.

"...the Government must not shy away from robustly protecting our competitive tax regime," Peter Keegan, country executive at Bank of America Merrill Lynch and president of the American Chamber of Commerce Ireland told a lunch meeting in Dublin. "We can stand firm in the knowledge that our tax regime is internationally recognised as fair, transparent and just. Ireland is not a tax haven and this is confirmed by the OECD and by the many tax treaties we have in place. Investors in Ireland build businesses of substance. We should not feel the need to be defensive or in any way embarrassed about this legitimate use of tax as a competitive tool.”

Delusion is unlikely to be a successful strategy.

The G-20 nations have also said in Moscow that there would be no so-called “currency war”.

They gave a commitment to refrain from competitive devaluations and stated monetary policy would be directed at price stability and growth.

Infographic G-20 countries

The G-20 represents about 90% of global GDP, 80% of world trade (including trade within the European Union) as well as two-thirds of the world's population, according to the IMF.

The G-20 comprises the 19 leading developed and emerging countries of the world: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the US, plus the European Union and the European Central Bank. The managing director of the International Monetary Fund and the president of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate at G-20 meetings.

Kenny in Davos: Ireland's tax regime is "very clear, very transparent"

Irish Economy: Economic fairytales of Ireland, exports, FDI and the IMF

Swiss tiring of foreign tax dodgers

Dutch tax haven has 20,000 letter-box companies including U2's

Company cash hoards rise to $8tn; Taxes, squeezed labour and 'trapped' cash - -  companies pile up profits and cash while wages in teh US have been stagnant for decades.

Irish Economy: Sustainable growth dependent on foreign firms since 1990; Now FDI has peaked

Irish Economy: Actual Individual Consumption per capita in Ireland is at EU average along with Italy; Germany at 20% above and UK at 18% - - Irish GDP per capita is 29 % higher than the EU average but that statistic is misleading.

Irish Economy: Pharmaceutical patent cliff no growth threat; High exports have low impact

Irish Economy: Export growth insufficient to pull domestic economy out of recession

Irish Economy 2012: At least a third of value of Irish services exports is overstated

Dell remains Ireland's biggest manufacturing exporter despite closing Limerick plant

Irish Economy 2012: Only 50,000 Irish direct workers responsible for 69% of annual Irish exports

Irish Economy: Innovation, a failed enterprise policy and inconvenient facts for 2013

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

Global Economy
Latest Headlines
Bad week for Russia; More sanctions and $50bn Yukos bill
French economist hails progress against tax evasion; Swiss banks will continue to cheat
IMF says global recovery continues but it cuts 2014 forecast
Dublin's Grafton Street 23rd most expensive country ranking retail location in world
Governments have collected €37bn from personal tax haven evaders since 2009
Global investors’ love affair with Europe is in question…
Island states dominate global e-trade; Australia, UK & Japan in top 5 of G20 countries
Greasing the wheels of energy and food supply
Composite leading indicators continue to point to stable growth momentum in OECD area
IMF's Lagarde says global "recovery remains modest and fragile"
Global markets euphoria not reflection of economic reality; Warns on ultra-low rates
IMF: Developing economies are victims of corporate tax avoidance
FDI: Ireland not among prospective host sites of top global companies
Global Manufacturing: UK lowest cost location in western Europe; Brazil one of highest-cost countries
Global investors have regained an appetite for risk says survey
Banks no longer seek ‘Swiss solution’
Great Recession impact on potential growth as if German economy vapourised
Global Fraud Survey: Cybercrime a concern for Irish business executives
World Bank cuts global economic growth forecast after ‘bumpy’ 2014 start
Composite leading indicators suggest weakening in most major emerging economies; Stable in OECD area
Emerging markets remain stuck in low gear in May
US heads 2014 FDI Confidence Index; 11 European countries among top 25
Global manufacturing activity improved slightly in May; Pace below Q1 2014
Merchandise trade declines across most major economies in first quarter of 2014
Global travel city survey puts Tokyo on top, Beijing among laggards
Competitiveness 2014: US leads; Europe recovers and big emerging markets struggle
US companies take top 10 positions in global brand ranking
Singapore world's most business-friendly location; Followed by Switzerland & Hong Kong
Germany stands out among countries where immigration rose in 2012
Global growth fears rise as wages stagnate in Eurozone and elsewhere
Fund managers scale back risk-taking in May; German economic sentiment slides
Corporate Tax Avoidance: US may join China in alliance on sharing information
Emerging market output growth remains weak in April
Switzerland: The trouble with travellers
Switzerland, Singapore join OECD agreement to end bank secrecy for tax evasion
OECD urges European Central Bank to cut interest rates
Handful of European tax havens key to pressuring Russia on Ukraine
Too old to work, too young to retire
Swiss Pay 2002-2012: Top 10% get more than double rise of lowest 10%
The changing face of global banana trade