A new dawn in anti-tax evasion proposals set out by some of the world’s biggest G20 nations looks set to damage the revenues of companies including Google, Amazon and Apple.
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Gathering in Sydney, G20 Finance Ministers are laying out plans to close tax loopholes around the world, with International Monetary Fund managing director Christine Lagarde noting that gaining revenue from online businesses in particular is a “big ongoing problem.”
Largrade called for an overhaul of the current system and cited the need for countries to become more proactive with regards to international tax arrangements.
“They [countries] have to invent new concepts just as quickly and as well as those companies are inventing their optimisation schemes,” she noted.
US Treasury Secretary Jack Lew took the opportunity to support a global taxation reform – noting it should be a goal for all G20 nations to tighten the tax avoidance loopholes engaged by many of the world’s largest multinationals.
Australia, as both the meeting’s host and one of the countries most heavily reliant on corporate tax receipts, has been pushing hard for a reform.
Many Western economies labour under the deficits created by multinationals using “contrived” structures – such as basing taxable operations in a tax haven – to avoid or lessen overall taxes.
Margaret Hodge, the House of Commons Public Accounts Committee chairman, recently called Google “evil” for its tax evasion in Britain; a move Google Chairman Eric Schmidt says he is “proud” of.
The rise of tax shaming also lead to the public outing of online retailer Amazon and coffee giant Starbucks; having paid no corporation taxes on total sales of GBP 3.2 billion and GBP 400 million respectively.
In addition Apple allegedly processes a majority of its GBP 6 billion-plus annual UK sales in Ireland, a relatively low-tax nation.
Over in Australia, promises were made in 2013 by the Federal Government to name and shame international companies using corporate loopholes to avoid tax, again including tech giants Apple and Google.
News stories such as these have visibly changed the public opinion on tax avoidance by companies. Once confined to a paper’s business pages, they now make for headline news.
The summit provided the setting to call for an automatic exchange of information scheme between each nation’s tax authorities to hamper offshore tax evasion.
“The G20’s work on tax co-operation is among our most important new initiatives,” Lew stated.
The G20 has also shown its support of an Organisation for Economic Co-operation and Development plan which would allow countries to ignore inter-company contracts which can see companies channel revenue into tax havens.
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