Britain, France and Germany back multinational tax clampdown

MOSCOW Sat Feb 16, 2013 1:29pm IST

Related Topics

Stocks

   

MOSCOW (Reuters) - The British, French and German governments launched a joint initiative on Saturday to crack down on tax avoidance by multinational companies that will be presented to a G20 finance leaders meeting in July.

The plan, unveiled by the three countries' finance ministers at a G20 meeting in Moscow, follows up on a report by the Organisation for Economic Cooperation and Development (OECD) that many big firms country-hop to pay less tax.

The OECD highlighted a growing trend for multinationals to shift profits to countries where tax rates are lowest, and urged a sweeping overhaul of international tax rules to prevent this.

"This work is the basis of increased international cooperation to make sure our tax rules reflect our international economy," British finance minister George Osborne said.

"Unbelievably our tax rules were created a hundred years ago by the League of Nations, and much has happened to our international economy since then."

German Finance Minister Wolfgang Schaeuble said the trio would examine ways to close loopholes that made it too easy for companies to decide where they paid taxes, particularly on "mobile income" such as interest, dividends and royalties.

"Multinationals should not be able to capture globalisation to unfairly reduce their taxes," he said.

THREE-PRONGED APPROACH

In a briefing paper, the UK Treasury said that Britain will chair an OECD group on transfer pricing, Germany will chair one on tax-base erosion and France - with the United States - will examine jurisdiction issues, especially on electronic commerce.

Britain chairs the Group of Eight forum this year and has said tax compliance will be a major focus when the leaders of the major economies meet in Northern Ireland in June.

The tax reform plan comes at a time when governments are facing public outrage over how some multinational companies handle their international tax affairs.

In Britain, the issue of multinational tax avoidance has risen to the top of the political agenda, after revelations that companies such as Starbucks (SBUX.O), Apple (AAPL.O), Google (GOOG.O) and Amazon (AMZN.O) were using complex inter-company transactions to cut their tax bills.

"The economic context is now a globalised world, where there are more investment and capital flows and new kinds of businesses are developing, especially in the digital economy," French Finance Minister Pierre Moscovici said.

"We must ensure that this new form of business also pays its fair share." (Reporting by Jason Bush. Editing by Douglas Busvine/Mike Peacock)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS EXCLUSIVE

REUTERS SHOWCASE

Modi In U.S.

Modi In U.S.

Obama, Modi work to deepen improving U.S.-India ties  Full Article | Related Story 

Factory Activity

Factory Activity

Factories expand at slowest pace this year in September  Full Article 

Videocon d2h IPO

Videocon d2h IPO

Videocon d2h files for up to $113 million IPOs  Full Article 

Asian Economy

Asian Economy

Asian factories slow in Sept, push inflation ever lower  Full Article 

EBay Divests PayPal

EBay Divests PayPal

EBay follows Icahn's advice, plans PayPal spinoff in 2015  Full Article 

New 'Windows'

New 'Windows'

Microsoft names next operating system 'Windows 10'.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage