Published On: Sat, Jul 23rd, 2016

G20 ministers urge tighter tax rules for multinationals

Event officials set up a meeting room on the eve of the G20 Finance Ministers and Central Bank Governors Meeting in Chengdu, China's south-western Sichuan province, on July 22, 2016 ©Fred Dufour (AFP)

Event officials set up a meeting room on the eve of the G20 Finance Ministers and Central Bank Governors Meeting in Chengdu, China’s south-western Sichuan province, on July 22, 2016 ©Fred Dufour (AFP)

CHENGDU: The world’s major economies need to deepen cooperation on tax collection and information sharing as companies seek to minimise the amount they pay to governments, finance ministers said Saturday.

The issue has become controversial in many countries, with multinational firms from Google to Starbucks facing accusations of not contributing appropriately to the economies where they make their money, and multi-billion-dollar merger proposals being partly driven by tax considerations.

“When the current cross-border tax rules were developed they were tied to concepts that reflected geography and national boundaries,” US Treasury Secretary Jacob Lew told G20 finance ministers meeting in the Chinese city of Chengdu.

“When we look at technology a lot of that has become harder to define.”

“There needs to be a common standard across countries on important issues of transfer pricing,” he said at a high-level symposium on tax policy, adding that countries had to deal “collectively” with issues that lead to non-taxation.

Closing loopholes, he added, would change the choices businesses make.

The G20 has previously supported proposals requiring authorities to share the identities of shell companies’ real owners, and backed creating a blacklist of international tax havens that do not cooperate with information-sharing programmes.

But the discussion as the G20 finance ministers and central bank chiefs meeting opened in Chengdu, in southwestern China, was wider, addressing base erosion and profit shifting, known as BEPS.

The term refers to companies using accounting techniques to shift their profits to low- or no-tax jurisdictions, reducing the amounts they are liable to pay.

Some countries, such as Ireland or Luxembourg, have drawn major firms to establish headquarters or subsidiaries by virtue of their tax rules — a key contributor to Dublin declaring earlier this month that its economy grew by a spectacular 26.3 percent last year.

“In the 21st century, talent, capital, and even physical infrastructures are increasingly mobile,” said Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD).

“So, a global conversation on these issues, on tax policy, is obvious, critical, important,” he said, later naming Google, Apple and Starbucks as example companies.

But he acknowledged that it could be a sensitive subject: “Tax policy has been and remains a sovereign issue.”

The seminar — jointly pushed for by Germany, China and the OECD — also addressed issues of using tax policy to promote growth.

Earlier French Finance Minister Michel Sapin told AFP that some countries, “not only China” were “reluctant” on questions of cooperation on tax evasion.

But Chinese Finance Minister Lou Jiwei said: “We need to deepen the international tax cooperation, building on existing mechanisms.”

News Source Daily Mail

About the Author

Syed Ammar Alavi

- is Lahore (Pakistan) based journalist & writer with 25-year experience in print, wire and broadcast forms of journalism. His major fields of interest are politics, film,tv,sports, climate change and technology