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G20 Backs Plan to Stop Tax Avoidance

The Finance Ministers of the G20, group of large nations have officially supported plans to combat international tax fraud and evasion.

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

It also supports the economic plans of the Organisation for cooperation and development to stop companies moving their profits across borders to avoid taxes.

The OECD said that some companies the rules in force "of abuse" to avoid tax.

Chancellor British George Osborne said the announcement, which follows a meeting of the G20's two days in Moscow, was an "important step towards a global tax system that is fair and adapted to the objective of the modern economy".
' ' Aggressive tax evasion.

Last month, the Group G8 major economies agreed an agreement for "the fight against the scourge of tax evasion", and nations, including the United Kingdom, the France and the Germany, the United States and the Australia are participating in a pilot information exchange program.

The premier British David Cameron has made this issue a priority for the Presidency of the G8 in the United Kingdom this year, and the Australia agreed to do likewise during its Presidency of the G20 next year.

The OECD said that the tax rules in force, dating back to some of the 1920s, have been created to avoid "double taxation" firms working in more than one country - but he said that they were ill-treated in order to allow "double taxation".

BBC business correspondent Joe Lynam said that the "train to repress the aggressive tax evasion" moved on from developed economies to emerging countries like the Brazil and the India.

The rules should mean large bills for businesses that could not previously 'pit one country against another in terms of tax', adds our correspondent.

The G20 asked the OECD to come up with a plan to improve tax cooperation, and Finance Ministers have said that they "fully endorse the proposal of the OECD for a truly global model" of information sharing.

Their statement called all countries to make automatic information sharing a reality "without further delay", adding that "support for the capacity-building" would be provided for poor countries.
Gaps

The G20 said that the changes should be implemented within two years, but our correspondent called that "very ambitious" because hundreds of tax treaties exist between countries and the "thousands of amendments" could be necessary.

Many multinational companies currently avoid tax - legally - by means including loopholes and tax havens, but the new rules could force them to pay more in the countries where they operate.

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

Earlier this year, members have attacked Google for routing EUR 3.2 billion, the turnover of the United Kingdom through Dublin and pay little tax accordingly.

Starbucks was asked to transfer money to a Dutch in royalty payments sister company, that the company agreed to pay more taxes after sharp criticism from the public.

Companies emphasize that these schemes are legal and they have a duty to shareholders to minimize their tax bills.
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