The European Commission has signalled its approval of plans announced by the finance ministers of the G20 to tackle tax evasion and corporate tax avoidance worldwide, which include developing a new international standard on automatic exchange of information.
Algirdas Semeta, commissioner for taxation, customs, statistics, audit and anti-fraud said the plans, which reflect the OECD's Action Plan to tackle Base Erosion and Profit Shifting (BEPS) marked 'a paradigm shift in international taxation' by ensuring that taxation reflects where economic activity takes place. He said this is 'the right approach to curbing corporate tax avoidance worldwide'.
'I particularly welcome the commitment to examine ways to overcome the tax challenges of the digital economy. This is an issue of high importance for the Commission and the member states, and it will be among the issues to be looked at during the October European Council dedicated to the Digital Agenda,' Semeta said.
The OECD's report to the G20 outlined proposals for automatic exchange of financial information on interest, dividends, account balance and income from certain insurance products. It also includes sales proceeds from financial assets and other income generated by assets or from payments made with respect to the account.
The report calls on the G20 to support the development of a standardised agreement to allow signatories of the Multinational Convention on Mutual Administrative Assistance in Tax Matters, which include all G20 members, to opt into automatic exchange of information.
It says developing such a model agreement could be completed by the end of 2013 with detailed guidance available in the first half of 2014. As well as common reporting and due diligence rules, the necessary technology and software also need to be developed.
Semeta said that 'the endorsement of automatic exchange of information as the global standard is extremely welcome' and called for 'swift action' to keep to what he described as an 'ambitious timeline'.
'For some time now, the EU has been the fore-runner in this field. The international consensus to follow our lead, with more openness and greater transparency, gives credence to our approach.It also creates the perfect environment for us to press ahead with expanding the scope of automatic information exchange within the EU, and seeking the same from our closest neighbours,' Semeta said.
