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As suggested by Germany and Great Britain, in February 2013 G20 plans to consider adoption of a single standard for the corporate profit tax. Realization of the proposal will, according to opinion of its authors, decrease capital outflow to countries with preferential taxation regimes. This might also contribute to solving the budget deficit problem which - together with decreasing business activity - is becoming more and more pressing even in the strongest European economies like Germany.
During the recent meeting of G20 in Mexico German and British financial ministers (Wolfgang Schäuble and George Osborne) recommended leaders of the block to create a single global standard for corporate taxation. The main goal is the same: prevention of capital outflow from countries with less favorable taxation regimes. The struggle against offshore zones (“tax haven”) became a pressing issue right after the financial crisis, but only in the course of the latest G20 meeting they finally got so close to actual harmonization of taxation regimes. A detailed plan should be ready before the next meeting in February – which, but the way, will be chaired by Russia.
According to estimations by Tax Justice Network, $1.1-1.6 trillion go to “shadows” each year. The amount of underpaid taxes is more than $250 billion. Jersey, Cayman and Virgin Islands are responsible for about 1/3 of all offshore operations. At the same time, European politicians are still more interested in Switzerland, Malta and Cyprus.
It was previously expected that a certain agreement on harmonization of profit tax rates would be adopted at the European level, but during the Mexican meeting of G20 authors of the idea said that struggle with tax evasion would be more successful with maximal coordination.
Last year’s fall Great Britain renewed its agreement with Switzerland, leaving the basic bank secrecy protocol untouched. At the same time, holders of undeclared assets in Swiss banks were offered an amnesty procedure starting from 1 January 2013 by paying a one-time tax of 20-34%. Germany is currently working on a similar proposal.
The problem with capital outflow has become very pressing with large budget deficits. According to Markit Economics, this October the business activity index in Europe was decreasing at a record-breaking rate.
Original source: Kommersant
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