G20 vows to tighten screws on errant MNCs

Brisbane (Australia): Australia on Friday vowed a “very aggressive” crackdown on tax avoidance at weekend G20 talks, as a row rages over Luxembourg’s sweetheart arrangements with multinationals.Closing corporate tax loopholes and endorsing a common reporting standard to increase transparency are set to be a primary focus of the G20 summit in Brisbane this weekend.

But the Organisation for Economic Cooperation and Development (OECD) cautioned that if such a level playing field is achieved, it will only make competition heat up to attract revenue from digital companies like Apple and Google as tax havens are shut down.

Leaders of the world’s most powerful economies want to ensure companies pay taxes where they make their profits, instead of using complex financial structures that allow them to slash their liabilities, depriving governments of billions in revenue.

The opacity of Luxembourg’s beneficial tax deals with a slew of companies, when its government was led by the new head of the EU’s executive Jean-Claude Juncker, has erupted as a major dispute heading into the G20.

Host Australia has made tax avoidance a key plank of its G20 presidency with treasurer Joe Hockey saying the practice of corporations shifting profits amounts to “theft”.

He pledged a “very aggressive” crackdown at the G20, with the United States throwing its support behind the plan.“They were cautious at first, but obviously the US itself has been missing out on revenue from a number of these large multinationals,” he said.