Today’s meeting of G20 nations is officially about an agreement to fight tax avoidance by multinationals.
Closing tax loopholes and increasing tax takes
The group of developed (and developing) economies formally backed plans to tackle international tax avoidance and tax evasion at its meeting in July. A new agreement is expected to be signed later today.
“Over the course of the last year, there has been growing alarm in many developed countries at the prospect of budget deficits remaining a problem for prolonged periods of time” said Mr. Frank Conway of the Irish Financial Review.
Former bastions of bank secrecy, including Switzerland have begun to change their ways under mounting international pressure.
“Countries with strong bank secrecy laws such as Switzerland and Luxembourg are providing more information following pressure to do so” said Mr. Conway.
Earlier this year, US political leaders questioned the tax affairs of one of the most powerful companies in the world. In providing testimony, Apple executives highlighted their use of legal tax loopholes which permitted that company reduce its tax liability significantly.
In other developments:
- Tax authorities in the U.S., U.K. and Australia earlier this year announced plans to share a “substantial amount of data” they have gathered concerning individuals’ use of trusts and companies to hold assets in low-tax havens in the Caribbean and elsewhere.
- On 12th June, 2013 the EU Commission proposed extending the automatic exchange of information between EU tax administrations, as part of the intensified fight against tax evasion.
- Residents of Spain with assets located outside it worth over €50,000 must declare everything with hefty penalties in store for those who don’t. The new decree was designed to allow those sitting ‘under the radar’ to declare funds worth over €50,000 held overseas in all bank accounts, shares, life assurance policies and real estate assets as of 31 December 2012.
“The game of relatively easy tax avoidance appears to be up. Loopholes are being closed and authorities seem to be committed to working more closely than ever to share information as a means of reducing tax loss.” said Mr. Conway.