G20 finance ministers to tackle corporate tax avoidance
An OECD action plan will be presented before the G20 in July
By CFOWorld.co.uk staff | CFO UK | Published 10:10, 18 February 13
The G20 group of finance ministers have pledged to tackle tax avoidance by multinational companies at a meeting in Moscow.
In their final communiqué of the discussion on tax avoidance led by UK, France and Germany, the ministers said they were determined to develop measures to put curbs on multinational firms shifting profits from one hub to pay less tax elsewhere.
The ministers also pledged to refrain from devaluing currencies to gain economic advantage and calmed fears of a "currency war" in wake of Japan's recent moves, which have resulted in a lower value of the yen, aiding its exporters in the process.
The finance ministers of UK, France and Germany – namely George Osborne, Pierre Moscovici and Wolfgang Schaeuble – supported international action on companies which transfer profits from their home country to another in order to pay lower taxes.
An OECD action plan will be presented before the G20 in July. It will be formulated with the help of three committees, one of which would be chaired by the UK.
The committee would be looking at transfer pricing – i.e. how multinational corporations calculate the payments passed between their subsidiaries in different countries. This can be used to shift profits from high-tax jurisdictions to lower-tax ones.
Germany will lead a panel looking at companies’ tax mitigation mechanisms while France and the US will jointly consider the problem of identifying the correct tax jurisdiction for e-commerce businesses.
"We are determined to develop measures to address base erosion and profit shifting, take the necessary collective action and look forward to the comprehensive action plan the OECD will present to us in July," the G20 communiqué read.
Speaking in Moscow, Osborne bemoaned a global taxation system which had been guided by principles set out by the "League of Nations in the 1920s, with few changes since".
He said, "We want businesses to pay the taxes that we set in our countries. And that cannot be achieved by one country alone."
A number of companies, including Amazon, Facebook, Google and Starbucks, have come under criticism for employing tax avoidance loopholes in recent months.
Away from taxation matters, the G20 ministers refrained from singling out Japan over the recent weakness of its currency. However, their communiqué pledged that G20 members would "refrain from competitive devaluation".
Share:Facebook Twitter Google Plus Stumble Upon Reddit Share This Email this article
The role of the CFO and the board in strategic risk governancemore ..
The SFO joins a growing band of global regulators investigating the possible manipulation of forex marketsmore ..
Industry bodies like the Institute of Directors have questioned corporate governance practices at the FTSE 100 companymore ..
Vince Cable is talking to the Takeover Panel about how to "strengthen" government powers in takeover dealsmore ..
Examining how CFOs can improve the way they report back to the boardmore ..
Litigation funding is a very useful tool for CFOs but not a panacea for all legal mattersmore ..