By: DailyForex.com
Whilst there is no disputing that death awaits us all, the truism that nothing is certain except death and taxes is only partly true when it comes to certain corporations. There seem to be many legitimate, tax avoidance measures that some rich individuals and major businesses can invoke to minimise or even negate what they need to pay in respect of certain taxes (e.g. corporation tax) which should apply to them. Then there is a whole raft of tax evasion measures which the unscrupulous may use to meet their obligations to the “grim reaper” of the exchequer. In these days of austerity, the liberties that some major corporations which are household names, have taken with their tax obligations has come to be a scandal in the USA, UK and wider European area.
The problem is highly significant: it was recently estimated that tax evasion costs the EU states more than they collectively pay for health care provision.
The G8, meeting this week in Northern Ireland, has announced a raft of measures which are designed to curb tax evasion. Governments will put in place systems to enable the automatic sharing of information on residents’ tax affairs. This will put further pressure on countries, notably Switzerland, to end banking secrecy. The plan also calls for tax loopholes to be closed and the owners of so-called shell corporations to be identified. Shell corporations can be used to make anonymous investments which renders tax collection very difficult, if not impossible, on the profits earned. Leaders will also require multinationals to declare which taxes they pay and in what jurisdictions. The G8 communique stated that “Countries should change rules that let companies shift their profits across borders to avoid taxes”.
The G8 will tackle money laundering and tax evasion through automated sharing of tax information. The UK has also announced moves to get its Crown dependencies and overseas territories which operate as tax havens to provide information on companies banking their profits with them.