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News : Global Economy Last Updated: Jan 9, 2015 - 8:39 AM


G20 leaders back unmasking shell companies, automatic exchange of tax information
By Michael Hennigan, Finfacts founder and editor
Nov 17, 2014 - 2:51 AM

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BRISBANE, AUSTRALIA - NOVEMBER 15: (Front row L-R) Russia's President Vladimir Putin, South Africa's President Jacob Zuma, France's President Francois Hollande, Germany's Chancellor Angela Merkel, Japan's Prime Minister Shinzo Abe, Australia's Prime Minister Tony Abbott, China's President Xi Jinping, United States' President Barack Obama, Brazil's President Dilma Rousseff, Saudi Arabia's Crown Prince Salman bin Abdulaziz, Turkey's Prime Minister Ahmet Davutoglu, (middle row L-R) Mexico's President Enrique Pena Nieto, Spain's President of the Government Mariano Rajoy Brey, European Commission President Jean-Claude Juncker, Republic of Korea's President Park Geun-hye, Canada's Prime Minister Stephen Harper, Indonesia's President Joko Widodo, United Kingdom's Prime Minister David Cameron, India's Prime Minister Narendra Modi, Italy's Prime Minister Matteo Renzi, European Council President Herman Van Rompuy, Argentina's Minister of Economy Axel Kicillof, (back Row L-R) FSB Chairman Mark Carney, International Labour Organization Guy Ryder, IMF Managing Director Christine Lagarde, OECD Secretary-General Angel Gurria, Senegal's President Macky Sall, Singapore's Prime Minister Lee Hsien Loong, New Zealand's Prime Minister John Key, Mauritania's President Mohamed Ould Abdel Aziz, Myanmar's President U Thein Sein, World Bank Group President Jim Yong Kim, WTO Director-General Roberto Azevedo and United Nations' Secretary-General Ban Ki-moon pose for a group photo during the G20 Leaders Summit on November 15, 2014 in Brisbane, Australia. Photo G20 Australia.

Leaders of the G20 (group of twenty), which comprises the 19 leading developed and emerging economies of the world, confirmed in a communiqué [pdf] at the end of a summit in Brisbane, Australia at the weekend, that they support unmasking the beneficial owners of shell companies and automatically exchanging tax information with each other at the end of 2018 at the latest.

The  communiqué says affirmed the principle that “profits should be taxed where economic activities deriving the profits are performed and where value is created” and last week's German-UK agreement was recognised while transparency on tax rulings for companies and the automatic exchange of information could be very important.

Profits should be taxed where economic activities deriving the profits are performed and where value is created. We welcome the significant progress on the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan to modernise international tax rules. We are committed to finalising this work in 2015, including transparency of taxpayer-specific rulings found to constitute harmful tax practices. We welcome progress being made on taxation of patent boxes. To prevent cross-border tax evasion, we endorse the global Common Reporting Standard for the automatic exchange of tax information (AEOI) on a reciprocal basis. We will begin to exchange information automatically with each other and with other countries by 2017 or end-2018, subject to completing necessary legislative procedures...
We commit to improve the transparency of the public and private sectors, and of beneficial ownership by implementing the G20 High Level Principles on Beneficial Ownership Transparency."

Tony Abbott, Australian prime minister, added at the end of the summit: "Now, we absolutely want companies to pay their fair share of tax and we want them to pay their tax in the jurisdictions where their profits are earned. This is particularly important for emerging and developing economies and we’re taking concrete and practical steps to achieve this. It’s about the countries of the world, the people of the world, receiving the tax benefits that are their due and it’s needed so that governments can fund the infrastructure and the services that people expect and deserve.

The leaders who represent economies comprising 85% of global GDP approved a package of 800 measures estimated to increase their economic output by 2.1% by 2018 if fully implemented based on calculation by  the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

“This will add more than US$2tn to the global economy and create millions of jobs,” the communiqué said. It added that countries would hold one another to account for implementing the commitments in the Brisbane action plan and comprehensive growth strategies.

However, the IMF and OECD analysis noted “the high degree of uncertainty entailed in quantifying the impact of members’ policies”. G20 members had set out “close to 1,000 individual structural policy commitments, of which more than 800 are new”.

These actions include trade measures and other product market changes, labour market changes, more spending on research and development, tax changes, and public infrastructure.

Related tax links

Germany and UK agree to restrict 'patent box' tax incentives to local R&D

Architect of tax "racket" to commit EU to fight against tax fraud

Hidden Taxes Report: Kenny denies Irish special Apple tax deal despite contrary "evidence"

Luxembourg Leaks: Irish Government's guff on tax system exposed; "Racket" needs to stop

Luxembourg confirmed as massive facilitator of tax avoidance

Bono struggling again as anti-poverty campaigner and tax avoider

Apple says it may have to pay Ireland back tax; Foreign tax rate at 4.4%

Double Irish tax scheme axed; Conventional wisdom wrong again - Part 1

Replacing the Double Irish with Knowledge Development / Patent Box - Part 2

Ireland's small gain from Apple's possible EU tax probe payment

European Commission: Apple given special tax deals by Ireland

Apple's foreign tax rate tumbled after 2007 Irish 'advanced opinion'

G20 finance ministers reaffirm commitment to tax reform; Ibec takes Finfacts' advice

OECD & Tax: Everything grand in Ireland's Republic of Spin?

OECD proposes biggest reform of global business tax rules since 1920s

Finfacts submission to Department of Finance consultation on corporation tax reform

OECD BEPS Project submission from Finfacts: Ireland should embrace corporate tax reform - - includes analysis of underperforming indigenous tradable sector.

Irish corporate tax policy like property bubble driven by short-term interests

IMF explains “Double Irish Dutch Sandwich” tax avoidance

US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Estonia heads OECD tax competitiveness index; Ireland at 15, US at 32

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