Brussels, 17/11/2014 (Agence Europe) - On Monday 17 November, the European Commission expressed mitigated optimism, following the meeting of the G20 in Lisbon, where the question of fighting tax optimisation was on the agenda. The G20 leaders have pledged to finalise the work on the OECD's BEPS in 2015, “including transparency of taxpayer-specific rulings found to constitute harmful tax practices”.
In the wake of the LuxLeaks scandal, President of the Commission Jean-Claude Juncker announced last week that work would soon be underway on a proposal to make the automatic exchange of information (AEI) on rulings obligatory, probably by means of a revision of the directive on administrative cooperation. Juncker pledged to ensure that the G20 would follow suit.
The commitment ultimately made by the G20 “goes in the right direction; it is a positive outcome, but it is not enough”, said Commission spokesperson Daniel Rosario. Rosario went on to say that Juncker had called for a specific reference to the automatic exchange of information on the tax rulings to be included in the final press release of the G20.
Three countries are reported to have shown little enthusiasm in these discussions - the United Kingdom, Japan and Australia - the last of which expressed concern mainly about the size of the final press release. The international press felt that the commitments taken were too vague. “The discussion was very positive”, according to one source who attended the meeting; “there was no vagueness between the leaders”, the source continued, going on to explain that these commitments need to be considered in the light of the OECD's BEPS action plan (which provides for an obligatory automatic exchange of information on rulings), and of the agreement between Germany and the United Kingdom on patent boxes.
The G20 welcomed the progress made on these patent boxes, which are tax regimes in favour of intellectual property. The agreement concluded between Berlin and London has helped to move the situation forward (see EUROPE 11194). This agreement was discussed within the G20 and is expected to be presented to the OECD countries this week. In general, the G20 explains that profits should be taxed where economic activities take place and value is created.
The NGOs did not applaud the results. The NGO One felt that the leaders had lacked courage, whilst the Financial Transparency Coalition said that the G20 “recognised the shortcomings in the financial system, but does not know what to do about them”. (EL)