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Will the G20 ever end the global problem of tax avoidance and tax evasion?

Ahead of the G20 Summit in Hamburg this week our own George Turner has published this op-ed in the German newspaper Die Tageszeitung today. The article discusses why, despite sustained political engagement from world leaders, we are still some way from solving the problem of tax avoidance and tax evasion. Here’s an English translation of the article:

Tax Justice Network warns at the UN against subversion of Sustainable Development Goals

Last week the Tax Justice Network director Alex Cobham was invited to the United Nations in New York to address the ECOSOC Financing for Development Forum. Here are his remarks, which highlight a major threat to the Sustainable Development Goals target to reduce illicit financial flows. And what’s that threat? A concerted effort to remove multinational tax avoidance from the scope. In fact, there’s been some very active lobbying in order to exempt corporate tax dodging from the ‘illicit financial flows’ definition.

This is life and death stuff.

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Developing countries’ access to CbCR: Guess who’s (not) coming to OECD dinner

It’s said that if you’re not at the table, you’re on the menu. Well, the OECD has just made available the list of activated relationships to automatically exchange country-by-country reports between countries. They use big figures like 700 relationships, but don’t get fooled by those numbers – simply look at the image below to see who really has access to CbCR.

Oh, by the way, there’s nothing wrong with your eye-sight. Developing countries are just not there…

phdskat cbcr relationships may17

Source: Rasmus Christensen (https://twitter.com/phdskat/status/860093952992608256?s=09), by kind permission

The problem is that instead of requiring a fully multilateral approach, the OECD has allowed bilateral relationships to the automatic exchange of CbCR. This makes it harder for more jurisdictions to exchange CbCR, and more costly to arrange – and in practice results in the exclusion of nearly all lower-income countries:

Some jurisdictions also continue to work towards agreeing bilateral competent authority agreements for the automatic exchange of CbC Reports with specific partners under Double Tax Conventions or Tax Information Exchange Agreements

Now, think of a major country that doesn’t appear on the image and is definitely choosing the bilateral approach when it comes to non-OECD countries. Hint 1:  its very many multinationals (MNEs) have aggressively pursued profit shifting, so that the misalignment of their global profits away from the locations of their real economic activity has gone from just 5% in the 1990s to more than 25% now. Hint 2: this country won’t be joining the CRS (the global framework for automatic exchange of banking information) either.

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