G20 agree to plug tax loopholes, share tax info automatically
Sydney: World's 20 leading economies Sunday agreed to start automatic sharing of tax information by end 2015, while emphasising that multinational corporations be taxed in countries where they earn their profits.
Amid large number of tax avoidance cases, India and other economies have been pressing for effective system for getting financial information from other nations, especially low tax jurisdictions.
Shifting corporate profits from high-tax countries to low tax jurisdictions is being debated worldwide in the backdrop of several large MNCs not paying fair share of taxes anywhere.
"We are committed to a global response to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles. Profits should be taxed where economic activities deriving the profits are performed and where value is created," said the communique issued after the meeting of G20 finance ministers and central banks governors concluded today.
While endorsing Common Reporting Standard for automatic exchange of tax information on a reciprocal basis, G20 said: "We expect to begin to exchange information automatically on tax matters among G20 members by the end of 2015."
Finance Minister P Chidambaram said that India has a huge stake in the automatic exchange of information for the tax purposes as well as BEPS project.
Some global companies, Australian Treasurer Joe Hockey, said, "...Aren't paying their fair share of tax anywhere. We want a global response".
The G20 asked all tax jurisdictions that have not yet complied with the existing standard for exchange of information on request to do so and sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
"We will engage with, and support low-income and developing countries so that they benefit from our work on tax," the communique added.
It said by the Brisbane summit in September, G20 members will start to deliver effective, practical and sustainable measures to counter BEPS across all industries in an increasingly globalised economy.