G20 Committed To 'Global Response' To BEPS
Tuesday, February 25, 2014
The Group of Twenty nations (G20) has reiterated its collective commitment to a global response to
Base Erosion and Profit Shifting (BEPS), which it said should be "based on sound
tax policy principles."
G20 finance ministers and central bank governors met in Sydney last week, where
they agreed that profits should be taxed where economic activities deriving
the profits are performed, and where value is created. They voiced their continued
support for the BEPS Action Plan drawn up by the Organization for Economic Cooperation
and Development (OECD), and said they intend to "start to deliver effective,
practical and sustainable measures to counter BEPS across all industries"
in time for a leaders' summit in November.
According to a communique published following their meetings, the ministers
endorsed proposals for the automatic exchange of tax information on a reciprocal
basis, and committed to develop an implementation plan by September. They expect
to begin automatic exchange among G20 members by the end of 2015.
The communique urges jurisdictions that have so far failed to comply with
existing standards on information exchange to do so at the earliest opportunity,
and to sign the Multilateral Convention on Mutual Administrative Assistance
in Tax Matters. It encourages the Global Forum on Transparency and Exchange
of Information for Tax Purposes to continue to monitor the progress made on
implementation, and to continue to update ministers on progress. The G20's Anti-Corruption
Working Group meanwhile has been instructed to provide an update by April on
the measures that can be taken to meet Financial Action Task Force (FATF) standards
on beneficial ownership and legal arrangements, such as trusts.
Speaking at the end of the summit, Australian Treasurer Joe Hockey said that
ministers had "made solid progress in ensuring companies pay their fair
share of tax." He explained that the communique reflects the shared goals
of Finance Ministers and Central Bank Governors, who together represent countries
which contribute to 75 percent of global trade flows and 85 percent of the economic
Algirdas Šemeta, the European Union's (EU) Tax Commissioner, welcomed
the meeting's outcomes as a "boost for transparency and fairness in global
taxation." He said that the EU has been the international flag-bearer on
automatic exchange, providing "significant, practical input to the table
in developing this new global standard."
Looking to the future, Šemeta said that the EU must "continue to
lead by example in tax good governance," and encouraged the EU's "neighbours
and international partners, including major financial centres, to do the same."
The UK has also trumpeted its role in tackling avoidance and evasion. Chancellor
George Osborne said: "Last year, the Prime Minister put tax at the heart
of the UK's G8 agenda, leading to groundbreaking consensus on the action needed
to bring greater transparency and fairness to the global tax system. The G20
took up the baton, and at this meeting we agreed the next steps in the international
fight against tax avoidance and evasion."
"The UK government is on the side of the hardworking majority of people
and companies who pay the tax they owe. By taking global action to reform the
system alongside a tough approach to enforcing the law at home, we will close
the net on those who think they do not have to play by the rules. This is a
victory for Britain's international agenda and the fight against wrongdoing."
Finance Ministers are scheduled to meet again in April.