G20 vows to crackdown on global tax loopholes

Finance ministers from world's biggest nations pledge to close tax loopholes

The likes of Google, Apple and Amazon were today facing a new tax crackdown as finance ministers from among the world’s biggest nations, who are gathering in Sydney, stepped up plans to close loopholes.

US Treasury Secretary Jack Lew threw his weight behind a push to make global taxation reform a goal for the G20 nations and tighten the loopholes used by major multinationals to avoid tax.

The weekend meeting of finance ministers and central bank governors was also set to endorse a separate scheme for the automatic exchange of information between international tax authorities in a bid to crack down on offshore tax evasion.

International Monetary Fund managing director Christine Lagarde, pictured, said gaining revenue from new global digitised businesses such as Google and Apple is a “big ongoing problem” and called for a radical rethink of international tax arrangements.

Largarde stressed that governments needed to be more fleet-footed to keep up. “They have to invent new concepts just as quickly and as well as those companies are inventing their optimisation schemes,” she said.

Host Australia — heavily reliant on corporate tax receipts — is pushing hard for reform, as many Western economies labour under deficits and multinationals use “contrived” structures to avoid taxes.

Google was recently labelled “evil” by House of Commons Public Accounts Committee chairman Margaret Hodge for paying so little corporation tax in Britain, its biggest market after America.

The internet behemoth paid $771 million (£463 million) in non-US corporation tax on foreign profits of $8.67 billion last year — double the amount it paid in 2012, but still much lower than typical UK companies.

In 2012 Amazon paid no UK corporation tax on estimated sales of £3.2 billion in Britain, as it has a base in Luxembourg to process sales, while Apple reportedly processes much of its £6 billion-plus annual UK revenue via low-tax Ireland.

Lew backed the need for tax harmonisation, saying on Friday that all nations should adopt the automatic exchange of information as a global standard. “The G20’s work on tax co-operation is among our most important new initiatives,” he said.

The G20 has also backed a plan drafted by the Organisation for Economic Co-operation and Development allowing countries to ignore inter-company contracts aimed at channelling profits into tax havens.

“This is not against multinationals,” OECD director-general Angel Gurria said. “Multinationals have to have legal assurance that they’re not going to be double-taxed, but they have to contribute; their fair share has to be put on the table.”

Start your day with The Independent, sign up for daily news emails
News
Bill Gates, founder of Microsoft and co-chair of the Bill and Melinda Gates Foundation
businessUber, Snapchat and Facebook founders among those on the 2015 Forbes Billionaire List
News
news... and what your reaction to the creatures above says about you
News
Homer’s equation, in an episode in 1998, comes close to the truth, as revealed 14 years later
science
News
news
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003