OECD has tax loopholes in its sights as G20 ministers meet
The OECD has proposed a rethink of the rules on taxing multi-nationals, taking aim at loopholes used by Apple and Google, as G20 finance ministers stress the need to create jobs.
Discussed in Moscow yesterday, the plan comes amid growing unease about the sort of tax avoidance measures that are part of the tax codes of countries such as Ireland and the Netherlands and common in other western countries.
Finance ministers and central bankers gathering in the Russian capital were otherwise focused on charting a course towards global economic recovery, and seeking to calm financial markets worried about the impact of stimulus programmes.
The G20, a forum that took the lead in the 2008-2009 financial crisis, now faces a multi-speed global economy in which only the US appears to be nearing a self-sustaining recovery.
China is suffering a slowdown amid doubts over the stability of its financial system; Japan has only recently embarked on a radical fiscal and monetary experiment; and Europe's economy is more stop than go.
Fed chairman Ben Bernanke's guidance in May that the Fed may start to wind down its $85bn in monthly bond purchases – intended to ease the flow of credit to the economy – triggered a steep sell-off in stocks and bonds and a flight to the dollar.
Investors were calmed by dovish testimony to Congress this week by Mr Bernanke, who is not coming to Moscow. Yet emerging markets – especially those that depend on commodities or have external deficits – have under-performed.
G20 labour ministers, who met on Thursday, held a joint session yesterday with finance ministers, putting the jobs crisis in Europe at the centre of the debate.
"Getting people back to work must be top of the agenda," US Treasury Secretary Jack Lew wrote in an article for the 'Financial Times'. "In many parts of the world, such as Europe, growth is too weak to drive job creation."
Mr Lew also urged China to speed reforms towards demand-led growth. Other G20 nations, led by Japan, are seeking greater clarity from China on how strains in its 'shadow' banking system will play out.
EU Employment Commissioner Laszlo Andor shared Mr Lew's prescription for recovery, saying investment in jobs was vital for maintaining social peace and emerging from years of austerity.
Russia, the first big emerging nation to host the annual presidency of the G20, is in an awkward spot following the flight of former US spy agency contractor Edward Snowden to Moscow.
G20 delegates arriving at Sheremetyevo airport may not have bumped into Snowden, but they ran into a protest over the jailing on Thursday of a Russian opposition politician.