G-20 finance ministers endorse reforms to tax system for curbing avoidance by multinational enterprises
AA photoG-20 finance ministers endorsed the final package of measures for a comprehensive, coherent and co-ordinated reform of the international tax rules during a meeting on Oct. 8, in Lima, according to a written statement Organization for Economic Co-operation and Development OECD).
During a meeting chaired by Turkish Deputy Prime Minister Cevdet Yılmaz, the G-20 finance ministers expressed strong support for the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, which provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to « disappear » or be artificially shifted to low/no tax environments, where little or no economic activity takes place.
They renewed a commitment for rapid, widespread and consistent implementation of the BEPS measures and reiterated the need for the OECD to prepare an inclusive monitoring framework by early-2016 in which all countries will participate on an equal footing. Ministers agreed to forward the BEPS measures for discussion and action by G-20 heads of state during their summit on Nov. 15-16 in the Turkish province of Antalya.
“Base erosion and profit shifting is sapping our economies of the resources needed to jump-start growth, tackle the effects of the global economic crisis and create better opportunities for all,” said OECD Secretary-General Angel Gurría.
“The G-20 has recognized that BEPS is also eroding the trust of citizens in the fairness of tax systems worldwide, which is why we were called on to prepare the most fundamental changes to international tax rules in almost a century. Our challenge going forward is to implement the measures in this plan, rendering BEPS-inspired tax planning structures ineffective and creating a better environment for businesses and citizens alike,” Gurría said.
Undertaken at the request of the G-20 Leaders, the work to address BEPS is based on the 2013 G-20/OECD BEPS Action Plan, which identified 15 actions to put an end to international tax avoidance. The plan was structured around three fundamental pillars: introducing coherence in the domestic rules that affect cross-border activities; reinforcing substance requirements in the existing international standards, to ensure alignment of taxation with the location of economic activity and value creation; and improving transparency, as well as certainty for businesses and governments.
Revenue losses from BEPS are conservatively estimated at $100-240 billion annually, or anywhere from 4-10 percent of global corporate income tax (CIT) revenues, according to the statement.