G20 urged to involve developing countries in tax avoidance crackdown

4 Sep 13
Charity Action Aid has called on the leaders of the Group of 20 countries to do more to include developing countries in measures to clamp down on global tax avoidance.

By Mark Smulian | 4 September 2013

Charity Action Aid has called on the leaders of the Group of 20 countries to do more to include developing countries in measures to clamp down on global tax avoidance.

Ahead of the G20 meeting in St Petersburg this week, Action Aid said developing nations should be full partners in implementing the international plans to tackle avoidance. The Organisation for Economic Co-operation and Development’s plan to tackle avoidance, which was published in July, is likely to be adopted by the group of developed countries at the meeting.

The OECD recommended internationally co-ordinated action across the G20 to prevent tax avoidance and improve transparency.

Although China signed up to the plan late last month, it does not yet extend to other countries. This is despite OECD estimates that developing countries lose three times more to tax havens than they receive in aid each year.

Action Aid tax justice campaign manager Chris Jordan said: ‘Flaws in the current tax rules allow companies to dodge billions in tax, depriving governments of vital cash for essential public services such as schools and hospitals in poor countries.

‘For the developing countries that lose billions of dollars each year to aggressive tax avoidance, the stakes couldn’t be higher. It’s vital that they have a seat at the table, so global tax rules aren’t stitched up by the major powers.’

Action Aid welcomed the OECD’s plan, which it said was ‘right to recognise that people will no longer tolerate a business-as-usual approach to tax, which has created a handful of big winners at the expense of billions of ordinary people’.

The OECD proposals said globalisation had benefited domestic economies, but had harmed countries’ corporate income tax regimes, leading to ‘a tense situation in which citizens have become more sensitive to tax fairness issues’.

This meant governments were harmed by receiving less revenue while paying more to try to ensure compliance, while other taxpayers had to pay more to meet the shortfall.

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