22/03/17

G20 ministers fail to agree on trade but maintain tax agenda

The new U.S. administration under President Donald Trump has made its mark by resisting a compromise on trade, the environment and the support of the developing countries at the meeting of the finance ministers of the world’s 20 largest economies in Baden-Baden, Germany, reports The Cayman Compass.

The G20 summit’s communique dropped the usually included explicit opposition to protectionism and contained a watered-down statement on trade.

The U.S. government blocked the inclusion of a commitment to open trade. Participating countries were only able to agree on the statement: “We are working to strengthen the contribution of trade to our economies.”

In contrast to previous years, the communique also omitted any mention of climate change because of U.S. objections. President Trump has in the past denounced climate change as “a hoax” and branded investment in the area a “waste of money.”

Despite the attendance of five African ministers from non-G20 countries, the meeting did not agree on any new initiatives or tangible projects involving Africa.

However, in terms of tax transparency and tackling tax avoidance, the G20 rhetoric has not changed.

While there is growing talk of a potential repeal of the U.S. Foreign Account Tax Compliance Act under the new leadership in the U.S., the G20’s message on tax issues and anti-money laundering efforts remained consistent.

The ministers agreed to continue to work toward “a globally fair and modern” international tax system.

“We remain committed to a timely, consistent and widespread implementation of the Base Erosion and Profit Shifting (BEPS) package, welcome the growing membership of the Inclusive Framework on BEPS and encourage all relevant and interested countries and jurisdictions to join,” the statement said.

The finance ministers asked the Organisation for Economic Cooperation and Development to report on the progress of BEPS implementation in time for the G20 Leaders Summit in July in Hamburg, Germany.

The statement further noted the first automatic exchange of financial account information under the OECD Common Reporting Standard, which will commence in September.

“We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters and urge all relevant jurisdictions including financial centers which have not yet done so to commit without delay to implementing the [common reporting standard] and to take all necessary actions, including putting in place domestic legislation, in order to start exchanges under the [common reporting standard] at the latest by September 2018.”

The OECD is preparing a list of jurisdictions that have not yet implemented international standards on tax transparency to a “satisfactory level” for the July summit, at which G20 leaders will consider defensive measures against these jurisdictions.

The meeting notes maintained the objective of standardizing the collection and exchange of beneficial ownership information to improve transparency of legal persons and legal arrangements “as an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering.”

The G20 ministers welcomed the work by the Financial Action Task Force and the Global Forum on Transparency and Exchange of Information for Tax Purposes in this area and anticipate a progress report from the OECD in time for the Leaders Summit in July.