(Australia PM and Chair of G20 Tony Abbott)
Fair and low is how taxes should be administered according to Australian Prime Minister Tony Abbott speaking at this year’s World Economic Forum in Davos.
Abbott’s comments on international tax reform are instructive not only because Australia has been at the vanguard of the international tax debate as Chair of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes – now chaired by India; but also because Australia now holds leadership of the G20.
The Aussie PM has re-affirmed that under his stewardship the G20 will continue to continue to “tackle businesses artificially generating profits to chase tax opportunities rather than market ones.”
Echoing the dogma of ‘fair’ taxation now in vogue in the Europe, the United States, India and a growing number of industrialised countries, Abbott is resolute in his mind that “an agreement on the principles needed for taxation to be fair in a globalized economy,” would be “a big step forward.”
Committed to the OECD Base Erosion and Profits Work Plan,Australia ‘s tenure as G20 Chair will seek acceptance of the principle that “in order for the global free-market economy to grow in a digitalised age, corporate profits must be paid where the revenue is generated and not elsewhere.”
The implications for international business and finance centres – onshore and offshore – are plain. They have become the target of countries eager to cash in on the taxes that continue to escape their reach because of rules, of their own crafting, deliberately designed to increase the global competitiveness of their own corporate behemoths.
In November the G20 Summit will be held in Brisbane. While most of the world is excluded from its dialogue this body has become the makers and ‘enforcers’ of international tax law especially supported by the technical expertise of the OECD.
(U.S President Barack Obama)
Passionate as Australia and its leadership may be about ensuring that companies pay taxes where they earn it, more powerful members of the G20 whose businesses depend on the non-taxation of profits through various legal means to stay competitive remain apathetic about the pursuit of such a global norm.
Few expect this to change in the ten months leading up to the Brisbane Summit.
For more on Australia’s 2014 G20 Agenda click here.
For more on the US Position on BEPS click here.
For more on Australia’s approach to tax evasion click here.