• G20 set sights on tax avoidance issue


    MOSCOW: The Organization for Economic Cooperation and Development (OECD) on
    Friday presented the Group of 20 (G20) nations with a bold action plan seeking to help increasingly cash-strapped governments replenish their depleted budgets, by cracking down on tax avoidance by corporate giants and the super rich.

    The G20 of emerging and advanced nations had asked the OECD to come up with the action plan, after agreeing earlier this year to make a priority out of cracking down on tax avoidance.

    The OECD said that governments needed to work to bring their tax regulation systems into greater harmony to prevent big investors parking huge sums in tax havens to avoid significant taxation.

    “New international standards must be designed to ensure the coherence of corporate income taxation at the international level,” the OECD said.

    It said that a proper rule system was needed as the current framework was “consensus-based” and risked being entirely undermined, especially as the digital economy becomes ever more important.

    “A bold move by policy makers is necessary to prevent worsening problems,” said the OECD.

    Finance ministers and central bank chiefs of the G20 states meet in Moscow on Friday and Saturday, and will hope to make a strong and unified statement on tax avoidance in their final communiqué.

    Actions proposed by the OECD include requiring taxpayers to disclose their aggressive tax planning arrangements to the fiscal authorities, but also making dispute resolution mechanisms more effective.

    Companies in the spotlight in the last months for using these legal, but controversial, methods of booking profits in low-tax countries include US giants Google, Amazon and Starbucks.

    The action plan should provide countries with domestic and international instruments that will better align the right to tax with economic activity, the OECD said.

    “Fundamental changes are needed to effectively prevent double nontaxation,” it said.
    “Moreover, governments must continue to work together to tackle harmful tax practices and aggressive tax planning,” it added.

    Tax avoidance is one of the top themes being discussed during the Russian G20 presidency this year, which will culminate in a summit in Saint Petersburg in September.



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