G8 Summit: Rich economies vow to fight tax evasion, but what about action?

The world’s rich economies said they would take a tougher stance on fighting money laundering and tax evasion but promised little in the way of specific new action at the end of a two-day summit on Tuesday.

Group of Eight leaders signed up for a list of aims including improving the transparency of who owns shell companies and deepening information-sharing between tax authorities. They also said they wanted companies to provide greater information to tax authorities on their profits.

[caption id=“attachment_884969” align=“alignright” width=“380”]  Image tweeted by David Cameron.[/caption]

British Prime Minister David Cameron has sought to clamp down on secret flows of money, making it a centrepiece of his presidency of the G8 this year.

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But the communique did not contain a firm pledge to create registers of the so-called beneficial - or true - owners of companies. That was something which Britain committed to on Saturday and many campaigners had hoped other G8 countries would follow suit.

The G8 leaders, meeting in Northern Ireland, said their governments would draw up action plans on how to move towards collecting and sharing information on beneficial ownership “subject to our different constitutional circumstances”.

The United States pledged to keep on pressing for legislation to cut down on the criminal use of shell companies but did not take firmer action for now.

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A frequent critic of tax havens, the United States has come under fire from campaigners for the low transparency requirements around ownership of corporate entities registered in some U.S. states such as Delaware.

The White House is keen to tackle such criticism and said it would push for registers of the true ownership of American companies.

“The U.S. will continue to forcefully advocate for comprehensive legislation to require the disclosure of beneficial ownership information, including a requirement to identify and verify beneficial ownership information at the time a company is formed,” it said in a statement.

Gavin Hayman, director of campaigns at anti-corruption group Global Witness, said the U.S. announcement fell short of Britain’s pledge of Saturday although some of the details on the possible definition of beneficial ownership looked stronger than previous proposals by Washington.

“The U.S. has promised this kind of thing before … and not a lot happened,” said Hayman.

Under the new British rules, companies will be required to obtain and hold information on their ownership and control which will then be held in a central registry, available to police and revenue agencies.

The G8 called on the Organisation for Economic Co-operation and Development (OECD), which advises rich nations on economic policies, to develop a template under which multinational corporations could be required to report profits and tax payments on a country-by-country basis, to tax authorities.

Tax campaigners had called for published country-by-country reporting to help shame companies into paying their fair share of taxes.

The G8 also said countries should change rules that let companies shift their profits across borders to avoid taxes.

Countries including Ireland and Luxembourg have come under criticism in the past year for allowing big international companies to shift profits from larger neighbouring markets into tax havens.

Reuters