The G8 and EU 'must work together to ensure full transparency in beneficial ownership'
David Cameron has called on G8 leaders and the EU to ‘inject the political will’ needed to raise to a new level international efforts to tackle tax evasion and ‘aggressive avoidance’, and to take radical action in four areas:
a new global standard for multilateral information exchange,
increasing transparency in beneficial ownership,
reform of global tax rules through the OECD and the G20, and
improving the ability of developing countries to collect tax.
The prime minister will host the G8 summit in Northern Ireland in June. In a letter to Herman van Rompuy, president of the European Council, he said ‘truly global’ action was needed to address the loss of tax revenue. EU leaders will meet in Brussels on 22 of May.
Information exchange
Cameron welcomed the EC’s action plan on tax fraud and evasion. The US Foreign Account Tax Compliance Act (FATCA) could pave the way for a new global system of multilateral automatic exchange of information, he said. ‘This covers a wide variety of products and entities – and critically, includes requirements, which the UK is implementing, to ensure that we can collectively tackle tax evasion through the use of offshore trusts.’
Having concluded automatic information exchange agreements with its Crown dependencies, the UK was now in advanced discussions with its overseas territories to do the same, he said. The recent decision by the G5 – UK, France, Germany, Italy and Spain – to pilot multilateral automatic information exchange was a significant step. ‘I’m delighted that other European countries, including Poland, have already signalled their willingness to join this initiative.’
Cameron said he hoped that next month’s European Council could give ‘the strongest possible message of support’ for the rapid adoption of multilateral automatic information exchange as a new global standard.
‘Corporate secrecy’
‘We must break through the walls of corporate secrecy,’ Cameron wrote. ‘A lack of knowledge about who ultimately controls, owns and profits from companies leads to aggressive tax avoidance, tax evasion and money laundering, undermining tax bases and fuelling corruption across the world. Therefore, the G8 and EU must work together to ensure full transparency in beneficial ownership.’
Profit shifting
Competitive national tax systems go hand-in-hand with individuals and corporates paying the taxes they owe, Cameron said. But some were choosing to ‘shift their profits artificially to ultra-low tax jurisdictions, distorting competition’. A global solution was necessary and the path to reform would start with ‘the basic recognition that current global tax rules do not reflect the modern and globalised economy that our citizens live and trade in’.
The prime minister said he hoped the European Council would strongly support ongoing work in the OECD and G20 to work up options for reform. EU leaders should also consider how country by country reporting of tax paid could be ‘further encouraged on a voluntary basis’.
Developing countries
Cameron said the final theme of the G8 tax agenda was ‘ensuring developing countries can collect the taxes owed to them’. HMRC and the Department for International Development were working to help developing countries improve their capacity to collect tax domestically, ‘including a fair share from multinational companies’, he added.
The G8 and EU 'must work together to ensure full transparency in beneficial ownership'
David Cameron has called on G8 leaders and the EU to ‘inject the political will’ needed to raise to a new level international efforts to tackle tax evasion and ‘aggressive avoidance’, and to take radical action in four areas:
a new global standard for multilateral information exchange,
increasing transparency in beneficial ownership,
reform of global tax rules through the OECD and the G20, and
improving the ability of developing countries to collect tax.
The prime minister will host the G8 summit in Northern Ireland in June. In a letter to Herman van Rompuy, president of the European Council, he said ‘truly global’ action was needed to address the loss of tax revenue. EU leaders will meet in Brussels on 22 of May.
Information exchange
Cameron welcomed the EC’s action plan on tax fraud and evasion. The US Foreign Account Tax Compliance Act (FATCA) could pave the way for a new global system of multilateral automatic exchange of information, he said. ‘This covers a wide variety of products and entities – and critically, includes requirements, which the UK is implementing, to ensure that we can collectively tackle tax evasion through the use of offshore trusts.’
Having concluded automatic information exchange agreements with its Crown dependencies, the UK was now in advanced discussions with its overseas territories to do the same, he said. The recent decision by the G5 – UK, France, Germany, Italy and Spain – to pilot multilateral automatic information exchange was a significant step. ‘I’m delighted that other European countries, including Poland, have already signalled their willingness to join this initiative.’
Cameron said he hoped that next month’s European Council could give ‘the strongest possible message of support’ for the rapid adoption of multilateral automatic information exchange as a new global standard.
‘Corporate secrecy’
‘We must break through the walls of corporate secrecy,’ Cameron wrote. ‘A lack of knowledge about who ultimately controls, owns and profits from companies leads to aggressive tax avoidance, tax evasion and money laundering, undermining tax bases and fuelling corruption across the world. Therefore, the G8 and EU must work together to ensure full transparency in beneficial ownership.’
Profit shifting
Competitive national tax systems go hand-in-hand with individuals and corporates paying the taxes they owe, Cameron said. But some were choosing to ‘shift their profits artificially to ultra-low tax jurisdictions, distorting competition’. A global solution was necessary and the path to reform would start with ‘the basic recognition that current global tax rules do not reflect the modern and globalised economy that our citizens live and trade in’.
The prime minister said he hoped the European Council would strongly support ongoing work in the OECD and G20 to work up options for reform. EU leaders should also consider how country by country reporting of tax paid could be ‘further encouraged on a voluntary basis’.
Developing countries
Cameron said the final theme of the G8 tax agenda was ‘ensuring developing countries can collect the taxes owed to them’. HMRC and the Department for International Development were working to help developing countries improve their capacity to collect tax domestically, ‘including a fair share from multinational companies’, he added.
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