Finance officials to clamp down on multinational tax evasion
Finance officials from the world's 20 biggest economies have committed to toughening laws and boosting cross- border cooperation to prevent multinational companies from avoiding as much as US$250 billion a year in taxes.
The unanimous agreement was announced Friday in Peru's capital on the sidelines of the International Monetary Fund's annual meeting. The plan, to be presented to heads of state for approval next month at a Group of 20 summit in Turkey, seeks to address concerns about whether large companies such as Apple and Google are paying their fair amount of taxes.
The 15-point action plan was drafted by the Organisation for Economic Cooperation and Development (OECD) in consultation with more than 100 countries. It seeks to eliminate so-called "tax shopping" for most favourable rates, profit shifting and a host of other strategies estimated to cost between 4 and 10 per cent of global corporate income tax annually.
"This isn't about whether you have high taxes or law taxes, it's about whether you're paying your taxes," said British Finance Minister George Osborne.
Angel Gurria, secretary general of the OECD, said the plan's implementation will be key given the wide range of capacities and resources of tax authorities around the world. To that end, Treasury Secretary Jacob Lew said the United States is doubling funding to help developing countries improve their technical expertise.
"This isn't just to ensure sustainability of public finances but recover the trust of our citizens who are coping with economic hardship," said Gurria.