Australia: OECD chief Angel Gurria Saturday handed the G20 recommendations on the biggest changes to international tax rules in more than a century in a bid to tackle corporate tax strategies that are costing countries billions.
The secretary-general said the plan, which seeks to close international loopholes used by multinational firms to avoid paying large amounts of tax, was “the most prominent step towards the modernisation of the international tax system in a hundred years”.
Gurria revealed that global efforts to crack down on tax avoidance had already identified 37 billion euros (US$53 billion) from voluntary disclosure programmes involving 24 countries over five years, adding that “more will come”.
The project “is about tackling aggressive practices which erode the tax base and artificially shift corporate profits to low- or no-tax jurisdictions”, he said at the G20 meeting of finance ministers and central bankers in the Australian city of Cairns.
“These are places where there is no link between the profit generated and the underlying value-creating activity.”
Australian Treasurer Joe Hockey, who is chairing the G20 meeting, said finance ministers had agreed to tackle base erosion and profit-shifting “to make sure companies pay their fair share of tax”.
“We have also agreed to increase transparency and crack down on tax evasion,” he said in a statement.
He added that G20 nations were set to endorse the finalised common reporting standard for the automatic exchange of information between countries on tax issues on Sunday.
“This will allow us to identify offshore income of multinationals and high-wealth individuals, so there will be nowhere to hide,” Hockey said.
Some countries, including Australia, are set to implement the reporting standard in 2017, while others will start in 2018.
Australian Tax Office commissioner Chris Jordan said his country raised Aus$480 million (US$429 million) in additional tax revenue last year from the exchange of information.