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G8 Leaders Pledge Action Plan for Tax Transparency 

Global Tax Adviser

 

June 25, 2013

 

The G8 leaders have committed to establish the automatic exchange of information between tax authorities as the new global standard, according to a release issued at the conclusion of the G8 summit in Northern Ireland held on June 17-18, 2013. The 33-page release, which summarizes the G8 leaders' agreement on tax and tax transparency, states that the G8 leaders will work with the OECD to develop a multilateral model to make it easier for governments to find and punish tax evaders. Earlier this week, the OECD released an 18-page report, "A Step Change in Tax Transparency", to analyze how jurisdictions could implement automatic information exchange.

Action plan
The G8 leaders also agreed to the publication of national "action plans" that set out specific steps to counter money laundering and tax evasion. These plans have been created under the following eight core principles:

 

  • Corporate ownership - Companies should know who owns and controls them, and their beneficial ownership and basic information should be adequate, accurate, and current.
  • Ownership registries - Beneficial ownership information on companies should be accessible onshore to law enforcement, tax administrations and other relevant authorities. This could be achieved through central registries of company beneficial ownership and basic information at national or state level.
  • Ownership of trusts - Trustees of express trusts should know the beneficial ownership of the trust, including information on beneficiaries and settlors. This information should be accessible by law enforcement, tax administrations and other relevant authorities.
  • Money laundering - Authorities should implement measures to target any risks to their regimes to counter money laundering and the financing of terrorism.
  • Nominee shareholders - Authorities should prevent the misuse of financial instruments and of certain shareholding structures which may obstruct transparency, such as bearer shares and nominee shareholders and directors.
  • FIs should know ownership of their customers - Financial institutions and designated non-financial businesses and professions, including trust and company service providers, should be subject to effective anti-money laundering and counter-terrorist financing obligations to identify and verify the beneficial ownership of their customers.
  • Penalties - Effective, proportionate and dissuasive sanctions should be available for companies, financial institutions and other regulated businesses that do not comply with their respective obligations, including those on customer due diligence.
  • International co-operation - National authorities should cooperate domestically, and across borders, to combat the abuse of companies and legal arrangements for illicit activity.


To ensure G8 members are held to account for their commitments, the G8 agreed to a public self-reporting process on progress made against individual action plans.

 

Extractives Industries Transparency Initiative
The G8 also pledged to take action to raise and make progress toward global standards for extractive industry transparency, both for countries with significant domestic extractive industries and the home countries of large multinational extractives corporations. Under these common standards, companies would be required to report on extractives payments, governments would take steps to ensure disclosure compliance, and governments that wish to move towards the Extractives Industries Transparency Initiative standard will voluntarily report their revenues. According to the G8 leaders, this approach would reduce reporting burdens on businesses, help fight corruption, and encourage more effective and efficient investment, including in developing countries.

 

Other issues
The G8 leaders' agreement also:

 

  • Expresses support for OECD's work to address tax base erosion and profit shifting
  • Includes an agreement to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world
  • Supports the ability of developing countries to collect the taxes owed them, by providing access to global tax information.

 

For more information, contact your KPMG adviser.

 

 

 

 

 

Information is current to June 25, 2013. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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