G20 leaders call for automatic exchange of information to fight tax avoidance


By Alistair M. Nevius, J.D.

“Tax avoidance, harmful practices and aggressive tax planning have to be tackled,” the leaders of the G20 countries said in a declaration adopted at the end of their summit meeting in St. Petersburg, Russia, on Friday, and they approved plans to address these problems.

In their declaration, the G20 leaders set out the principle that “Profits should be taxed where economic activities deriving the profits are performed and where value is created,” and they called on member countries to examine how their domestic laws and tax rules may contribute to companies’ shifting their profits to low-tax jurisdictions.

As part of the declaration, they endorsed the Organisation for Economic Co-operation and Development’s recently released Action Plan on Base Erosion and Profit Shifting, which recommended 15 specific actions to prevent international tax avoidance by multinational companies.

The G20 leaders also stated their commitment to the automatic exchange of information and called for a new single global standard for automatic exchange of information by February 2014. They expect to begin automatic information exchange among G20 members by the end of 2015.

The declaration called for the development of a road map for developing countries to show how they can overcome obstacles to participating in the automatic exchange of information and to assist them in meeting the new global standard.

The group called on all countries to join the Multilateral Convention on Mutual Administrative Assistance in Tax Matters “without further delay”. They also endorsed the work of the OECD’s Global Forum on Transparency and Exchange of Information and urged all countries to address the Global Forum’s recommendations.

The 27-page declaration also covered economic growth and job creation, and the G20 leaders adopted an action plan designed to boost economic activity around the world.

Related CGMA Magazine content:

G8 Leaders Agree to Greater Tax Transparency”: Leaders of the G8 countries agreed to steps to improve tax transparency at their summit in Lough Erne, Northern Ireland.

Push for Automatic Exchange of Tax Information Gathers Momentum in Europe”: European Commission President José Manuel Barroso announced that the commission will propose an expansion of the automatic exchange provisions of the Council Directive 2011/16/EU to cover “all relevant types of income”.

OECD Wants Corporate Tax Reform to Receive International Attention”: A study the Organisation for Economic Co-operation and Development conducted found that some multinational companies pay as little as 5% in corporate taxes whereas smaller businesses pay up to 30%.

Alistair Nevius (anevius@aicpa.org) is CGMA Magazine’s editor-in-chief, tax.

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