CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.

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 activity.

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.