G20 Nations Pledge To Fight Cross-Border Tax Evasion
CANNES, France -- The United States, China, Germany and other major rich and emerging economies have pledged to fight cross-border tax evasion under an agreement approved Friday, which supporters say could raise tens of billions of dollars at a time when indebted European nations are scrambling for more revenue.
The deal approved during the Group of 20 summit adds to a marathon campaign by the United States and the European Union to pressure Switzerland and other tax havens to scrap practices they say help wealthy individuals and companies hide income.
Supporters say the agreement could help governments collect tens of billions of dollars in taxes on previously hidden income.
The G-20 governments marked the official approval of the agreement Friday by all of the group's members during the summit in this Mediterranean resort.
The Organization for Economic Cooperation and Development, which developed the agreement with the Council of Europe, has pointed to estimates that the United States loses $100 billion a year and Greece $30 billion to tax evasion.
The agreement is meant to promote tax fairness, which might help to ease social tensions that have fueled protests in Europe, the United States and elsewhere, said Jeffrey Owens, director of the OECD's center for tax policy.
"We want the rich to pay taxes. We want the multinationals to pay taxes. That's important in today's environment," Owens told The Associated Press. "Unless citizens know that the tax burden is fairly shared, they're not going to pay their taxes."
An OECD study in 20 countries found that increased cooperation meant the campaign against use of tax havens prompted 100,000 wealthy taxpayers to disclose assets and pay euro14 billion in taxes, Owen said. He said an estimated euro1 trillion in assets still is hidden from tax authorities.
As part of a week of protests around the G-20 summit in Cannes, a small group of activists protested Thursday at the border with nearby Monaco to call for an end to tax havens.
Tiny, opulent Monaco has long attracted the rich and famous – and those seeking a quiet place to park their millions – but has worked to improve transparency under OECD pressure and was removed in 2009 from its black list of uncooperative tax havens.
The agreement commits governments to cooperate in assessing and collecting individual and corporate income, value-added and property taxes, Owen said. It includes a promise to strengthen measures to protect the confidentiality of taxpayer information.
Owen said the OECD is working with governments of developing countries in Africa and Latin America and hopes they will start signing up to the agreement over the next year.