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G8 Leaders Agree To Tax And Transparency Plans

Thursday, June 20, 2013

Leaders from the world's eight biggest industrialized nations have signed a declaration they claim will "make a real difference" in the fight against tax evasion and avoidance.

The "Lough Erne declaration," named after the Northern Ireland location of the latest G8 Summit, contains ten points, the foremost of which is that: "Tax authorities across the world should automatically share information to fight the scourge of tax evasion."

Securing a deal on information exchange was one of the priorities set ahead of the Summit. UK Prime Minister David Cameron, who hosted the talks, had urged an end to the "era of tax secrecy."

Cameron announced at the weekend that he had secured an agreement from the UK's overseas territories and crown dependencies that will see them sign up to the multilateral convention on information exchange. Similarly, the European Commission last week unveiled plans for a substantial expansion of the categories of income that will be made subject to automatic information exchange within the European Union (EU).

The G8's declaration goes on to recommend that multinational corporations should report to the authorities what tax they pay, and where, and that countries amend rules that enable profit shifting for the purposes of tax avoidance. Emphasis is also placed on company ownership, with the declaration stating that "companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily."

In a similar vein, the G8 also adopted an Action Plan, which sets out "core principles that are fundamental to the transparency of ownership and control of companies and legal arrangements." It argues that companies should obtain and hold information on their beneficial ownership, and that central registries containing these details should be set up at national or state levels. Likewise, trustees of express trusts ought to acquire such data, and financial institutions and designated non-financial businesses and professions, placed under effective obligations to identify and verify the beneficial ownership of their customers.

On the enforcement side, the Action Plan emphasizes that "effective, proportionate and dissuasive sanctions" must be "robustly enforced." Countries are warned to be aware of the risks attached to their anti-money laundering and counter-terrorist financing regimes, and make any appropriate reforms. Authorities should be able to act rapidly upon a request for information from a separate jurisdiction, and, at an international level, should cooperate across borders to combat abuse.

The G8 will publish national Action Plans, based on these principles, and each jurisdiction will issue public updates on the progress made.

Finally, a communique issued by all G8 members commits them to working with the Organization for Economic Cooperation and Development (OECD) "to develop rapidly a multilateral model which will make it easier for governments to find and punish tax evaders." The G8 will also "support the OECD's work to tackle base evasion and profit shifting … [and] will work to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world."

In a joint statement released after the conclusion of the Summit yesterday, European Commission President José Manuel Barroso and his European Council counterpart, Herman Van Rompuy, claimed that G8 leaders had "seized and reinforced the momentum in the global fight against tax evasion and tax fraud." The event sent "a powerful signal that we are ready to take action to make sure that companies and individuals pay the taxes due," they added.

The response from the Confederation of British Industry (CBI) has been one of measured support. According to Katja Hall, Chief Policy Director, the CBI supports the plans for the automatic exchange of information, and the strengthening of tax authorities. These changes "will help inspire market confidence and attract investment," she said. Reporting high-level profits to tax authorities will prompt "more focused and targeted audits, without placing disproportionate extra burden" on business, and should be welcomed by them.

However, the CBI is against the imposition of full country-by-country reporting requirements. Hall said that this would "risk swamping people in highly complex data, rather than improving transparency."

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Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
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Offshore Trusts Guide: Jurisdictions

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British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
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British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

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Cayman Islands: Legal Framework and Formation Rules and Fees
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Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

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Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

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Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

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Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
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Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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