The leaders of the G8 group of industrialised nations have agreed to clamp down on tax evasion, money laundering and corporate tax avoidance schemes, following the conclusion of their 2013 summit in Lough Erne, Enniskillen in Northern Ireland on Tuesday.
In a wide-ranging agreement, the G8, which includes UK, US, Germany, France, Italy, Russia, Canada and Japan, agreed to give each other automated access to information on their residents' tax affairs. Furthermore, a new framework would require shell companies, often employed to mitigate tax exposure, use legal loopholes and invest money anonymously, to identify their effective owners.
The final G8 2013 summit communiqué, dubbed the ‘Lough Erne Declaration’, urged countries to "fight the scourge of tax evasion" adding that they should change rules that let companies shift their profits across borders to avoid taxes, and multinationals “should report to tax authorities what tax they pay where”.
The move follows revelations about complex tax avoidance mechanisms adopted by several global multinational corporations, including but not limited to, Google, Apple, Starbucks and Amazon.
UK Prime Minister David Cameron, under whose presidency the summit was convened, had placed the issue of corporate tax avoidance at the heart of the agenda. Responding to the summit declaration, Cameron said the move will see countries work together to ensure companies pay “proper” levels of taxes.
“This international tax tool is going to be a real feature of ensuring that we get proper tax payment and proper tax justice in our world. There would be nowhere to hide for those who avoid paying their fair share of tax to disadvantage those who play by the rules,” he added.
The G8 leaders also said developing countries should have corporate identification data and the capacity to collect the taxes owed to them and other countries had “a duty to help them”. A statement to this effect targets extractive industries such mining, oil and gas firms.
It follows revelations that many major mining companies use complex ownership structures in the Netherlands and Switzerland to avoid paying taxes on the natural resources they extract in developing countries. Hence, the G8 agreed that mining companies should disclose all the payments they make, and that "minerals should not be plundered from conflict zones".
"We agreed that oil, gas and mining companies should report what they pay to governments, and that governments should publish what they receive, so that natural resources are a blessing and not a curse," Cameron explained.
On a related note, UK Chancellor George Osborne revealed that island nation was being proactive on information front by establishing register of companies and their owners. The US delegation to the G8 also said the White House will follow suit with its framework for American firms along similar lines.
Earlier on Monday, the summit saw the launch of free trade negotiations between the EU and US with the first round of talks scheduled to be held in July. The G8 also noted that that global economic prospects remain weak, but downside risks have reduced thanks in part to significant policy actions taken in the US, euro area and Japan, and to the resilience of major developing and emerging market economies.
However, the summit, construed largely as an economic forum, was distracted from its core agenda by differing positions between Russia and the West, over the conflict in Syria. The Russians back the Assad regime while others at the table are mulling over the issue of how to support rebels aiming to overthrow him.
Elsewhere over the two day summit, US President Barack Obama took time out on Monday for a speech in Belfast. In it, the president congratulated the people and politicians of Northern Ireland over the progress they had made in achieving peace, following on from the Good Friday agreement of 1998.
"If you continue your courageous path towards permanent peace, and all the social and economic benefits that come with it, that won't just be good for you. It will be good for this entire island, for the United Kingdom, for Europe; and it will be good for the world," he told an audience of students from across Northern Ireland.
Later in the day, Obama and Prime Minister Cameron visited the Enniskillen Integrated Primary School, attended by both Catholic and Protestant children, on the outskirts of Enniskillen. It was established as a symbol of peace in the wider community in wake of the 1987 IRA Poppy Day bombing which resulted in 12 fatalities.
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