G20 looks to step up fight on tax evasion
Finance ministers and central bankers from G20 countries meet in Moscow for a two-day meeting on Friday seeking to intensify the battle against tax evasion and prevent a new global slowdown.
The meeting, preparing for a G20 summit in September that will be the culmination of the Russian presidency of the Group of 20 top advanced and emerging nations, will focus on increasing cooperation in the fight against tax evasion and on regulating finance.
One government source, who declined to be named, said the priority was “to make headway towards greater transparency, towards stronger action against countries with uncooperative legal systems.”
A key objective is to tackle techniques of tax optimisation, the complex accounting arrangements used by multinational businesses to minimise their tax bills.
Companies in the spotlight for using these legal, but controversial, methods of booking profits in low-tax countries are US giants Google, Amazon and Starbucks.
So-called tax havens are countries sought out for tax evasion, which is illegal, or avoidance which may be legal but can be highly controversial.
The issue has become a hot subject, particularly in crisis-hit countries where austerity measures are associated with tax increases and high unemployment.
The role tax havens play was exposed this year by “Offshore Leaks”, a series of revelations about assets lodged in them by high-profile people.
“The techniques of tax evasion and tax havens are the top target for governments and the ministers are going to want to be sure that it is being treated as such” in the run-up to the summit in September, economist Chris Weafer at consultants Macro Advisory told AFP.
The tax issue is also a chance for G20 countries to speak with one voice at a time when they are divided over the state of the world economy.
The 17-nation eurozone is stuck in recession and the economy of the United States is struggling to gain momentum. The high rate of growth of emerging economies, which has helped to support global activity, is showing signs of slowing and this is also a cause for concern.
China, with the second-biggest economy in the world, has just reported that its economy grew by 7.6 percent in the first half of the year, confirming a slowing of its rapid growth.
This is a worry for countries which provide China with raw materials and products.
At the beginning of July the International Monetary Fund lowered its forecasts for growth of the economies in China, Brazil, South Africa and Russia.
US Treasury Under Secretary Lael Brainard said on Monday that the United States wanted to hear from the Chinese how they intended to support domestic demand.
Washington also wondered what economic moves leading European nations and Japan had in mind. The Europeans should stimulate demand and growth, he said.
A German source said that against the background of the still simmering eurozone debt crisis, that Germany would push debt reduction.