G-8 leaders vow to crack down on tax evasion
LONDON — With many of their governments strapped for cash, leaders at a summit of rich nations vowed Tuesday to crack down on tax cheats by swapping financial information and exposing companies that set up elaborate structures to hide their profits.
The agreement was one of the clearest indications yet of growing momentum behind a global crackdown on tax evasion and avoidance amid criticism that corporations such as Apple and Google, as well as wealthy individuals, have exploited loopholes or gone to great legal lengths to avoid paying their fair share.
Meeting in Northern Ireland, the Group of 8 industrialized nations, including the United States, Japan and Germany, pledged to promote an international system of automatic information-sharing among tax authorities and to take steps toward forcing shell companies to reveal their true owners. Such moves are considered crucial to eliminate schemes that activists say result in the worldwide loss of billions, perhaps trillions, of dollars in public revenue, which could otherwise be spent on schools, hospitals and poverty reduction.
Though details of the measures have yet to be worked out — and are likely to encounter strong resistance from multinational corporations — officials hailed the 10-point agreement as real progress on an issue that countries have promised but failed to tackle before.
“These are really strong commitments that have never been written down in this sort of way and then signed. And I made sure that every G-8 leader signed them,” said British Prime Minister David Cameron, who hosted the summit at a golf resort near Belfast. “This is now, yes, words on a page, but words on a page that the G-8 is going to be judged on year after year after year.”
Curbing tax avoidance has risen high on the agenda in many countries as their governments enact painful budget cuts that have sent protesters into the streets. Public anger on both sides of the Atlantic has been fueled by revelations of the low amount of taxes companies such as Google and Starbucks have managed to pay compared with their profits, often through sophisticated accounting methods that seem designed purely to keep their tax bills down.
Attention has also focused on the use of offshore tax havens to conceal funds or launder money. Many are small islands that come under Britain’s wing; Cameron went into the summit having secured a pledge from the leaders of those territories to accept greater transparency and information-sharing, which increased his leverage.
Jose Manuel Barroso, the head of the European Commission, acknowledged that some countries around the G-8 negotiating table had reservations over certain elements of the 10-point agreement. The U.S. and Canada, for example, have been skeptical of the idea of compiling registers showing the real owners of companies, which they fear would anger the business community.
But all G-8 leaders committed their governments to drawing up action plans on exchanging tax information and shining a light on “beneficial ownership” of companies. They said they would try to persuade the wider G-20 to adopt the same standards, and then the rest of the world.
“There is a momentum now, a real momentum, in terms of the fight against tax fraud and tax evasion,” said Barroso, who called it a simple “question of fairness.”
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