Group of Eight leaders agreed to work for “a new global standard” to stamp out bank secrecy and pledged to deter multinational companies’ tax-avoidance strategies, according to a draft joint statement.
On the second day of talks in Enniskillen, Northern Ireland, G-8 nations adopted a common approach to standards for cross-border disclosure and tax-data sharing among authorities, saying they “commit to establish the automatic exchange of information between tax authorities” to shine a light on how companies and individuals are meeting tax requirements.
“We will work to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world,” according to the draft distributed today after a night of bargaining by aides to the eight heads of state and government.
G-8 countries agreed to publish “national action plans to make information on who really owns and profits from companies and trusts available to tax collection and law enforcement agencies, for example, through central registries of company beneficial ownership,” according to the draft.
Governments’ efforts to close down avenues for multinationals to channel profits through the lowest-tax locations and to crack down on tax evasion reflect a push to secure revenue amid financial turmoil and sluggish growth.
“Essentially, the goal of cracking down on tax avoidance, bringing greater transparency to it, is something that we have pursued in the United States,” Ben Rhodes, deputy national security adviser to President Barack Obama, told reporters late yesterday.
U.K. Prime Minister David Cameron, who is hosting the G-8 meeting, has prodded companies to review what he called “aggressive tax-avoidance strategies,” which he called a “moral issue” in a Bloomberg interview last week.
European nations are moving toward a common standard on tax-data reporting in response to new requirements for doing business with the U.S. The campaign has sparked new interest from skeptics like Luxembourg and Austria. The push has gained further momentum as the EU seeks breathing room within its own commitments to slash budget deficits, which have hampered growth across the 27-nation bloc.
The Organization for Economic Cooperation and Development urged leaders to cooperate in a report on tax avoidance prepared for today’s summit. The report finds a clear legal basis for comprehensive automatic exchange with strict safeguards protecting confidentiality.
“Offshore tax evasion is a global issue requiring global solutions -- otherwise the issue is simply relocated, rather than resolved,” the OECD report said. “A proliferation of inconsistent models is in nobody’s interest.”
The U.K. has rolled out its own anti-tax evasion measures. Britain’s network of overseas territories and dependencies on June 15 agreed to Cameron’s request that they sign up to extended transparency rules aimed at preventing tax evasion.
The islands around Britain known as the Crown Dependencies -- Jersey, Guernsey and the Isle of Man -- joined the British Virgin Islands, Bermuda, Cayman Islands, Gibraltar, Anguilla, Montserrat and the Turks and Caicos Islands in agreeing to support an automatic tax information exchange begun by the U.K., Germany, France, Italy and Spain.
“It is important we are getting our house in order,” Cameron said in a statement after the talks at his office in London. “It is a very positive step forward and it means that Britain’s voice in the G-8 and the campaigning on this issue around the world for proper taxes, proper companies and proper laws will be stronger.”
The U.K. will establish its own register of beneficial ownership because many companies use such structures to avoid taxes, Cameron said.