China has become the last member of the G20 advanced economies to sign a treaty aimed at fighting global tax evasion. The problem is rampant as more and more corporations use tax havens to avoid paying their dues.
China had signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, ensuring that all members of the Group of 20 (G20) were now collaborating in the fight against tax avoidance, the Organization for Economic Cooperation and Development (OECD) announced Tuesday.
The agreement meant that tax authorities worldwide were moving from bilateral to multilateral cooperation and from exchange of information on request to automatic exchange of information, the Paris-based OECD said in a statement.
“Today's signing is both timely and important as the G20 has endorsed automatic exchange of information as the new global standard,” OECD Secretary General Angel Gurria said.
The Convention is an OECD plan initiated at the G20 Summit in Cannes, France, in 2011. At the time, the leaders of the world's most advanced economies agreed to crackdown on corporate tax avoidance strategies. Global companies such as Starbucks, Apple and others have increasingly resorted to internal accounting methods allowing them to legally transfer profits out of countries were they were made and into so-called tax havens.
China reportedly suffers enormously from the outflow of un-taxed profits. Apart from the G20, an additional 36 countries have signed the Convention to date.
International tax cooperation and transparency will feature centrally on the agenda of the upcoming G20 summit in Russia next week.
uhe/msh (AFP, dpa)