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G20 makes good progress on tax but only for rich countries, says Christian Aid

6 September 2013

G20 leaders' decisions on tax and financial transparency are welcome but they do little or nothing for poor countries, which currently lose some $160 billion a year to tax dodging by multinationals, says Christian Aid.

Sorley McCaughey, Head of Advocacy and Policy, said: ‘G20 leaders meeting in St Petersburg have endorsed reforms which tax justice campaigners have long demanded - and that is very positive.

‘However, although the G20 acknowledges that developing countries must reap the benefits of international work to stop tax dodging by multinational companies, it has not made any real commitments to make it possible in practice,’ he said.

‘Developing countries have not been invited to sit at the negotiating table on an equal footing. Nor have G20 countries done anything to strengthen the UN Tax Committee, which supports poor countries' contribution to the negotiations but is too under-resourced to do so effectively. 

‘If the voices of developing countries are not heard, then the risk is that reforms to the international tax system will only benefit rich and emerging economies.’

OECD: international tax reforms

The OECD is leading work on international reforms to stop multinationals dodging tax. a joint briefing on the OECD process, by Christian Aid and 33 other organisations, is here.

Christian Aid also welcomes the G20’s decision to endorse automatic information exchange as the new global standard for governments helping each other to catch tax evaders - but believes the reform must benefit all countries, poor as well as rich.

Mr McCaughey said: ‘The project to implement automatic information exchange must include capable developing countries from the outset. It cannot be an instrument to tackle tax evasion only in rich countries.

‘If the leaders of the G20 are genuinely concerned about developing countries raising their own tax revenue, then those countries cannot be excluded from work to implement automatic information exchange. It does not make sense to say that developing countries are not ready to implement it - some are as ready as any developed country.’

In relation to transparency around multinational companies' finances, Mr McCaughey said: ‘Requiring multinationals to report to tax authorities on their worldwide allocation of profits and tax is a welcome step but it is not enough. Many other groups, including investors and customers, have the right to know whether multinationals are paying their fair share of tax.'

Christian Aid believes G20 leaders should also have done more in relation to the secrecy that surrounds who really owns and controls millions of companies around the world. At present, criminals including tax dodgers, money launderers and terrorists are abusing that secrecy, safe in the knowledge that it is hard or impossible for the police to trace their links with companies whose real owners are hidden.

Christian Aid has launched a campaign calling for the government to introduce a public registry of the ultimate owners of companies, as a way of deterring those trying to hide their wealth under layers of notional  company ownership.

‘Companies occupy a huge, and growing, part of our society. We buy from them, sell to them, work for them, invest in them, partner with them on a daily basis.  Given their significance to the operation of our societies it seems unjust that we currently have no right to know who is ultimately in control of companies,’ Mr McCaughey said.

 


 

If you would like further information or an interview please contact Sorley McCaughey in Dublin on 087 062 0062, or Adrian Horsman in Belfast on +44 7710 764 093.

Notes to editors:

  1. Christian Aid works in some of the world's poorest communities in around 50 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.

  2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended:  this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. For more information about the work of Christian Aid visit christianaid.ie.