G20 Leaders sign off on tax transparency for the few
November 16th, 2015
November 16th, 2015
G20/OECD plans on automatic exchange of financial information and corporate profit shifting well intentioned but miss the mark on inclusion
Leaders of some of the world’s largest economies have given their final approval to plans to cut tax evasion and increase corporate transparency, yet countries most affected by tax dodging and illicit flows weren’t at the drafting table when pen was being put to paper.
G20 leaders signed off on two projects led by the Paris-based Organization for Economic Cooperation and Development (OECD) at the conclusion of the G20 Summit in Antalya, Turkey today. The two proposals, the Base Erosion and Profit Shifting (BEPS) project, and the Common Reporting Standard for Automatic Exchange of Financial Account Information (CRS) are aimed at tackling corporate secrecy and cross-border tax evasion.
“While the need to tackle illicit financial flows and tax dodging is acute worldwide, the G20- and OECD-led process is inherently flawed: governments from countries most adversely affected weren’t involved in their design,” said Pooja Rangaprasad, Policy Coordinator of the Financial Transparency Coalition.
The CRS, aimed at curtailing cross-border tax evasion, would let countries in the system exchange financial information at designated intervals, so that governments can learn about money being kept abroad by their citizens. But questions linger about the inclusion of low-income countries that may not have the technology or capacity to meet some of the requirements. Perhaps the most notable deterrent is the CRS’s ‘immediate reciprocity’ clause, which says that a government can only receive information if they’re able to send information about their own country at the same time.
The BEPS process, aimed at cutting down on tax avoidance by multinational corporations (MNCs), faces similar questions about inclusion because vital information from the new reporting effort won’t be made public. The project would require MNCs to report on their profits, taxes paid, and other financial information on a country-by-country basis. Currently, corporations can produce bundled financial reports for their operations around the globe, making it impossible to know where the economic activity actually occurred. But the OECD and G20 have resisted sustained calls to make these reports public.
“Multinationals will file these reports with their home country governments, most of the time within the OECD,” said Porter McConnell, Director of the Financial Transparency Coalition. “But the information won’t be easily accessible to governments of developing countries, where many MNCs have extensive operations, thus making it that much harder for all of us to tackle tax dodging.”
“In today’s communiqué, G20 leaders have encouraged others to join the BEPS implementation process on equal footing,” added Rangaprasad. “Sadly, developing countries weren’t included on equal footing when the rules were actually being written.”
Christian Freymeyer, firstname.lastname@example.org, +1.410.490.6850
🚨@FinTrCo & 36 global civil society orgs call for US to tackle its black hole of financial secrecy undermining demo… https://t.co/c9YXSj1fUm
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