Greetings! Looking forward to the discussion.
Hi everyone and welcome to Thomson Reuters Foundation online chat on Secret Money - Has the G8 pulled back the veil on tax havens and secret money? We have some great guests lined who are real experts in the field. We'll kick off in just under 10 minutes.
A quick summary of what the G8 agreed: 1) Companies should disclose the tax they pay on a country-by-country basis; 2) Countries pledged to improve the transparency of shell companies and trusts, delivering action plans on how they'll go about it; 3) Tax authorities should automatically exchange tax information to fight tax evasion
Let's get started. Welcome to our experts who have joined Thomson Reuters Foundation to explain what the G8 action on taxes and transparency really means: Does it draw back the veil of secrecy? May I invite Raffaele Russo at OECD to start by introducing himself and tell us the work you are doing on taxes
Thank you Stella. I am a Senior Advisor at the OECD Centre for Tax Policy and Administration (Paris), where I currently coordinate the work on Base Erosion and Profit Shifting (BEPS). Until recently I led the work on Aggressive Tax Planning and on Tax Crimes, worked on the Model Tax Convention and Transfer Pricing and helped updating
the Multilateral Convention on Administrative Assistance in Tax Matters.
Love those acronyms - BEPS! Thanks and welcome Raffaele. Heather Lowe at Global Financial Integrity, would you like to introduce yourself and your work?
Thanks very much, Stella, I’m happy to be here today. I am Legal Counsel and Director of Government Affairs for an organization called Global Financial Integrity, or GFI, based in Washington, DC. GFI’s mission is to curtail illicit financial flows from developing countries in order to spur growth in those countries, and we focus on how policies in the international financial centers like the U.S., London, and other tax havens encourage that capital flight. Among other things, we advocate for automatic exchange of tax information among countries, the country by country reporting of key financial indicators by multinational companies, and getting rid of anonymous shell companies around the world. These are three of the key topics of focus for the G8 this year. GFI is a member of the US-based FACT (Financial Accountability and Corporate Transparency) coalition, Publish What You Pay USA, and the international Financial Transparency Coalition.
Great - FACTS are what we are all after here. Hi Tom Bergin at Reuters. Would you explain the reporting you are doing on corporate taxation?
Hi, I am a Reuters specialist correspondent and for the past year I have been involved in a series of tax investigations of companies including Starbucks and Google which have led to parliamentary investigations here in the UK. our aim was to highlight how the tax system works in practice and to illustrate areas that may be weaknesses and which may warrant legislative changes
Let me start by asking Raffaele Russo. A central part of the G8 plan is country-by-country reporting by corporations and the OECD has been tasked with coming up with a plan to implement this. How can this be achieved?
Sure Stella. But let me start with a general comment on the G8 and the reactions it is generating today.
Those complaining about the G8 outcomes sound like the manager of a football team who complains because his/her team only won 4-0 while it could have been 5-0. We congratulate the G8 for putting its full force behind international efforts to bolster sustainable growth through global solutions to tax evasion and avoidance. now about CBC.
CBC is a big one. We see this as a typical win-win situation, less cost for business to report, more useful information for tax administrations. Now I understand some would like to scrutinise MNEs tax accounts, but tax authorities are there for a reason.
CBC is going to be a core part of the BEPS action plan and I am confident that we will deliver a useful plan to the G20 in July. The devil is obviously in the details and we are paying attention to that as we speak, well .. write.
A big question though is -- will this information be made public? Or is it just another collection of data by government with little public accountability. What is OECD's view on how to structure it?
Can I add to that? Rafaelle – I think the team dropped the ball on country by country reporting. It is limited to tax information and it is not public disclosure. Taking tax information out of the greater financial context of a company’s international operations fails to grasp the point. The OECD and the G8 have not supported public disclosure of the information. What method does the OECD plan to use to determine whether the measures it recommends are, in fact, effective? Will the public have access to any of the information that informs their determination?
I would add that the Communiqué states that the G8 countries “will act to restore confidence in the fairness and effectiveness of our international tax rules and practices.” Public confidence will come from greater openness.
The OECD view is to structure it based on a template, so that MNEs can use the same one in the different countries where they operate. As I mentioned, if this is to check whether there are tax risks that tax adms need to analyse better it is quite obviuos to me that this is info to be given to the relevant tax adm.
Isn't that really the system that's already in place. Report your tax information to your tax administrator?
I understand Stella and have a lot of sympathy for those like who have contributed to put the issue at the ceterstage. As I said, understand some would like to scrutinise MNEs tax accounts, but tax authorities are there for a reason. I would rather campaign for more resources to be allocated to tax administration than to "outsource" tax administration functions to enlightened campaigners.
Tom, you have reported on venue shopping by big corporations. Is this going to start to change the name of the game for multi-nationals?
Stella, no the system is not in place, there is no obligation to break down the info by country - that is why to me it is a big (and welcome) change.
The corporations and industry bodies that I have spoken to say they already provide a lot of information to tax authorities in one country on their operations in other countries. Also many countries have company registers where full
accounts can be accessed....
The way I see it dear Alex is that Ts (trade, tax, transparency) have been crossed, it is now time to dot the Is (implementation, implementation, implementation): pass from words to actions and the OECD stands ready to (
continue) working relentlessly to deliver.
i think some developing countries struggle to get info about overseas affiliates of companies operating on their turf so perhaps this is who this measure is expected to help? Raff
Tom, the info companies provide today are voluminous costly and often of no great use in risk assessing - TP documentation requirements vary from country to country and I am ready to bet that no one currently provides info re profits/taxes/employment on a country by country basis - if someone says the opposite, happy to talk to him/her
Let's remember, G8 and G20 usually acts incrementally, so it is fair to say that this is a good beginning. Heather and Raffaele, could you answer the question on whether there are any penalties planned for non-compliance?
Colby - I am not aware of corporate push-back against reporting of corporate control and ownership in the other G8 countries, although it may be there (I think the British CBI is on board), but there is resistance by governments of some of the countries.
The G8 and G20 are not treaty based or subject to any legal system, so sanctions are not really possible. There has been a lot of work done on measuring accountability moving forward, however, and there are some good civil society organizations working to ensure the process is robust.
I may not have understood the question well. in most countries today you go to jail for tax fraud evasion and are subject to hefty penalties in cases considered to be avoidance, so is the question about coordinating penalties for non-compliance?
thanks Alex some are never happy, others are always happy but never satisfied. aiming for more is good but not recognising progress is denying the obviuos
I haven't given an overall take yet, so I'd throw in that if you had told me a year and a half ago that the UK would create this agenda for the G8, I would have been very surprised. I think that countries have come a long way in the last few years in understanding the importance of the movement of illicit money around the world, and this Summit reflects that. I can certainly understand Jeffrey Robinson’s skepticism, however, and we need to see words turned into action. Unfortunately what the leaders still don’t seem to have grasped is that a large part of the problem is the secrecy that shrouds the movement of that money. They have still failed to build in meaningful transparency to the measures to address the structures that facilitate the movement of illicit money.
re developing countries, dear Joseph I see this as a rather than giving fish teach him how to fish and that is what we intend to do with tax inspectors without borders
Tax Inspectors Without Borders (TIWB) is a kind of “dating agency” that will match demand for practical tax audit assistance from developing countries, with appropriate experts. The exchange of knowledge and skills is based on a “learning by doing” approach. The OECD’s feasibility study indicates strong demand for practical capacity building measures, with a focus on tax audit activity relating to international tax issues. We aim for Tax Inspectors Without Borders to be up and running by the end of 2013, to be initially housed as a project of the OECD’s Tax and Development Programme.
well and that's exactly where automatic exchnage of information will make the difference