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G20 tax reform is welcome. Governments and companies must act immediately

African governments must now seize the opportunity of G20 tax reform, while companies should not wait for new legislation.

Governments, tax payers, and many companies all pay the price for an international tax system that simply does not work. Governments are less able to finance public services ; tax payers must pay more tax ; compliant companies are less competitive. Meanwhile inequality grows and social tensions too. Tackling tax avoidance and evasion has become an urgent issue.

To this extent, we welcome progress on tax issues by leaders at last week’s G20 summit in St Petersburg.

We would have liked to see more progress towards transparent company ownership, but we welcome the evolution of a single global standard for the automatic exchange of tax information and the recognition that implementation should be global.

In this spirit, we now urge African governments to take the G20 at its word, to build on last weeks’ G20 declaration, and to :

- identify any needs for technical assistance and capacity building, with support from the Global Forum on Transparency and Exchange of Information, the OECD Task Force on Tax and Development, the OECD’s Tax Inspectors Without Borders initiative, the World Bank Group, and other international organisations.
- analyse how their laws contribute to base erosion and profit shifting,
- sign up to the multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Multinational business will recognise that good reputation brings its own benefits. Besides building reputation, increased transparency also builds critical trust, arguably the greatest insurance policy for any multinational company. For any multinational businesses wishing to be more transparent about their tax, we urge them to :

- work with African governments to disclose contracts, beneficial ownership, and the nature and amounts of tax payments ;
- clarify intra-company transactions, including payments made for goods and services traded between affiliates and subsidiaries ;
- help build in-country capacity to negotiate stable, mutually beneficial deals including on tax.

With tax avoidance and evasion representing such gross injustice, we expect this issue to stay high on the international political agenda. On the other hand, the implementation of major change does not happen overnight. African governments and multinational companies must keep this process moving forward.

Source : Africa Progress Panel

Publié le 12 septembre 2013