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G20 Backs Plan To Stop Global Tax Avoidance And Evasion.

Article by WealthSafe.

Date Published: 22 Jul 2013

News item from the BBC.COM.AU on 20 July 2013.

Finance ministers from the G20 group of leading nations have formally backed plans to tackle international tax avoidance and evasion.

A statement issued earlier supports the automatic exchange of tax information between countries.

It also backs plans by the Organisation for Economic Cooperation and Development to stop firms from moving their profits across borders to avoid taxes.

The OECD said some firms “abuse” current rules to avoid tax.

UK Chancellor George Osborne said the announcement, which came after a two-day G20 meeting in Moscow, was an “important step towards a global tax system that is fair and fit for purpose for the modern economy”.

‘Aggressive tax avoidance

Last month, the G8 group of leading economies agreed on a deal to “fight the scourge of tax evasion”, and nations including the UK, France, Germany, the USA, and Australia are taking part in a pilot information exchange scheme.

British Prime Minister David Cameron made the issue a priority for the UK’s presidency of the G8 this year, and Australia has agreed to do the same during its G20 presidency next year.

The OECD said current tax rules, some dating to the 1920s, were created to avoid “double taxation” of companies working in more than one country – but it said they were being abused to allow “double non-taxation”.

BBC business correspondent Joe Lynam said the “bandwagon of clamping down on aggressive tax avoidance” was moving on from developed economies to emerging ones like Brazil and India.

The rules should mean bigger bills for companies which could previously “pit one country off against another in terms of tax”, our correspondent added.

The G20 asked the OECD to come up with a plan to improve tax cooperation, and the finance ministers said they “fully endorse the OECD proposal for a truly global model” of information sharing.

Their statement called on all countries to make automatic information sharing a reality “without further delay”, adding that “capacity-building support” would be provided for poorer nations.

Closing loopholes

The G20 said the changes should be in place within two years, but our correspondent called that “very ambitious” because hundreds of tax treaties exist between countries and “thousands of amendments” might be needed.

Many multinational firms currently avoid tax – legally – by means including loopholes and tax havens, but the new rules could require them to pay more in the countries where they do business.

Firms including Google, Starbucks, Amazon, and Apple have been criticized for the amount of tax they pay.

Earlier this year, MPs attacked Google for routing £3.2bn of UK sales through Dublin and paying little tax as a result.

Starbucks has been questioned for transferring money to a Dutch sister company in royalty payments, though the firm agreed to pay more tax after strong public criticism.

The companies point out that these schemes are legal and they have a duty to shareholders to minimize their tax bills.

Our governments are really going way too far.

Have a read of this new statement, it is totally nuts.

Basically, it is all the big countries getting together to share information and stop people from using
international tax planning to minimize their tax and pay lots more tax

The guise is on getting the big companies but it is a classic case of governments removing all the freedoms
and abilities of people and businesses to genuinely get ahead in business

The comment Fight the Scourge of Tax Avoidance  and  “Abuse Current Rules to Avoid Tax” can only be described as complete nonsense.

Tax rules cannot be abused if they are followed. The Tax rule is either complied with or not complied with.

You don’t comply with the spirit of the law you just comply! There are many court cases going way back.

To criticize and defame business owners as “a scourge” and “abuse” just because they take all legal steps of avoiding the tax is a disgrace and a very sad indictment as to where our world and counties have come to. Especially when the people making the accusation know fully that managers and directors of public companies have a legal duty to legally minimize tax when it is available to them, and this is something even the courts have stated and the ATO for years!! Crazy.

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