During the G20 Leaders’ Summit in St. Petersburg, the members have signed up to begin automatically sharing tax information by the end of 2015 in an effort to actively prevent tax evasion. The decision was taken to close loopholes that allow legal tax avoidance by big organizations.
The G20 heads of states adopted a declaration that profits should be taxed where economic activities are performed and where value is created.
Over 50 countries have agreed to facilitate exchange of information on tax issues, however many developing countries have not yet signed up to the international convention. The G20 leaders have stated that they will share experience with these countries on tracking funds in low-tax jurisdictions.
The declaration follows similar moves at the G8 Summit in Lough Erne, Enniskillen in Northern Ireland that took place in June 2013. In a wide-ranging agreement, the G8, which includes United Kingdom, United States of America, Germany, France, Italy, Russia, Canada and Japan, have already agreed to give each other automated access to information on tax affairs of their residents.
Moreover, the G20 members backed the Action Plan of the Organisation for Economic Co-operation and Development (OECD) published earlier this year. The OECD’ plan is designed to eliminate base erosion and profit shifting (BEPS). It identifies actions needed to address BEPS, sets deadlines to implement these actions and identifies the resources needed and the methodology to implement these actions.