Sunday 18 February 2018

G8: Deal on tax and money-laundering reached

An agreement sealed by leaders of the G8 nations meeting in Northern Ireland can "rewrite the rules" on tax and transparency to benefit countries across the world, David Cameron said today.


The Lough Erne Declaration - signed by the UK, US, Germany, France, Italy, Canada, Japan and Russia - vows to "fight the scourge of tax evasion" by ensuring automatic exchange of tax information and changing the rules to stop multinational companies shifting profits across borders to avoid paying their fair share.


Mr Cameron said the declaration would support nations including the poorest in the world and would help ensure "proper tax justice".


Speaking at a press conference in the resort, he said: "We agreed a Lough Erne declaration that has the potential to rewrite the rules on tax and transparency for the benefit of countries right across the world, including the poorest countries in the world.


"We have commissioned a new international mechanism that will identify where multinational companies are earning their profits and paying their taxes so we can track and expose those who aren't paying their fair share."


He said the new tool would help ensure "proper tax justice in our world".


But the 10-point document, released after two days of talks at Lough Erne, falls short of the demands of anti-poverty campaigners, who want the developing world included in the new arrangements from the start and have called for tax information to be made available to all on public registers.


The declaration says only that developing countries "should have the information and capacity to collect the taxes owed them", rather than guaranteeing them automatic access to the information.


And it says only that "tax collectors and law enforcers" should have access to information about the ultimate owners of companies, leaving it to individual G8 countries to decide whether to make the information public.


The White House said it would leave the decision to individual US states, while Chancellor George Osborne said the UK was "open" to the idea of public registers and is consulting on the issue.


The British Prime Minister said "jobs, growth, mending our broken economy" was the issue that mattered most to people.


"We agreed a strategy for growth, a strategy for Britain's hard-working families. This must be based on dealing with our debts, unlocking the finance that businesses and families need, and increasing our competitiveness so that young people can get into work and succeed in the global race," he said.


The EU and US have announced the start of negotiations on a major bilateral trade deal, which Mr Cameron said was about jobs and "low prices in our shops".


Mr Cameron said the new commitments to transparency on company ownership would help ensure "people can't avoid taxes by using complicated and fake structures".


The Prime Minister said the declaration made clear that "all this action has to help developing countries too by sharing tax information and building their capability to collect taxes".


The leaders agreed oil, gas and mining firms should report what they pay to government and administrations should publish what they receive "so that natural resources are a blessing and not a curse".


Mr Cameron made it clear when taking up the year-long rotating presidency of the G8 that he wanted the summit to produce a simple, easy-to-understand summary of positions agreed at the summit.


Condensed on to one side of A4, the Lough Erne document starts with the declaration: "Private enterprise drives growth, reduces poverty and creates jobs and prosperity for people around the world.


"Governments have a special responsibility to make proper rules and promote good governance.


"Fair taxes, increased transparency and open trade are vital drivers of this."


As well as reforms to tax laws and information-sharing and the register of companies' "beneficial ownership", the G8 countries committed themselves to "make a real difference" by:


:: Tackling corruption by requiring extractive industries like mining, oil and gas to report payments to all governments - and requiring governments to publish their income from such companies;


:: Ensuring that minerals are sourced legitimately, and not plundered from conflict zones;


:: Requiring land transactions to be transparent and to respect local communities' property rights;


:: Rolling back protectionism and agreeing new trade deals to boost growth and jobs;


:: Cutting wasteful bureaucracy at borders, particularly in the developing world;


:: Publishing official information about laws, budgets and spending to allow citizens to hold them to account.


Campaigners and development charities welcomed the G8's agreement to take action on tax and transparency, but said more needed to be done to secure benefits for poorer countries.


Sally Copley, spokeswoman for the anti-poverty campaign Enough Food For Everyone If said: "Today's G8 tax deal is a step in the right direction, but it also leaves major unfinished business.


"Although the G8 has set out the right ambition on information exchange, poor countries battling hunger can't afford to wait to be included."


Adrian Lovett, Europe executive director at the One campaign said: "A transparency revolution has begun. The G8 has made an important contribution, with action on transparency in the oil, gas and mining sectors, on open data, on aid transparency and a significant step forward on tax transparency.


"But despite the leadership demonstrated by the UK and France, the G8 collectively has taken only small steps to crack down on the phantom firms that play such a role in robbing Africa of its resources. David Cameron and Francois Hollande must now lead the fight in Europe, driving efforts to get EU members to agree to make information about who really owns and controls companies public.


"If African countries are to retain and invest their resources, rather than see them siphoned away by corrupt politicians and irresponsible businesses, this is what is needed. Nothing else will do."


Laura Taylor, head of public policy at Tearfund, welcomed moves to ensure greater openness about extractive industry contracts as "progress of a sort", but said that the declaration - which repeatedly states that companies and governments "should" declare payments, rather than "must" - was too weak.


"We believe that 'should' is not enough, and that the two G8 countries which have not yet legislated for transparency must do so - and do it soon," said Ms Taylor.


"To be fair, Cameron was always going to have a hard time trying to strong-arm Japan and Russia to commit to mandatory reporting in the oil, gas and mining industries, so today's stated commitments are progress of a sort.


"But we won't unearth the truth about corruption and reach a global extractives transparency standard until everyone joins in."


ActionAid spokesman Soren Ambrose said the G8 deal did not go far enough: "There remains a mountain to climb when it comes to ending the global scourge of tax dodging. We have inched into the foothills but have not yet begun the ascent.


Mr Ambrose said he was heartened that the G8 had taken steps towards requiring companies to report on the profits they make and the taxes they pay in each country where they operate. "If this is taken forward in an enforceable and fully public way, developing countries will realise real benefits."


Japan's prime minister Shinzo Abe said his top priority was his country's economic revitalisation as Northern Ireland's First and Deputy First Ministers accepted his invitation to visit East Asia.


He met Japanese businessmen working in Northern Ireland, his country's companies employ more than 2,000 in the region, after touring the Titanic Belfast visitor's attraction.


"My administration's top priority is Japan's economic revitalisation," he said.


"Last week we announced Japan's revival strategy which put what I call comprehensive economic policies for economic revitalisation."


He said his key words were challenge, innovation and action, the latter the "foundation" of them.

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