In a joint declaration, the G7 leaders reaffirmed their commitment to finalise, by the end of this year, recommendations from the larger group of G20 finance ministers and the Organisation of Economic Cooperation and Development (OECD) on their Base Erosion and Profit Shifting (BEPS) Action Plan, which was announced last September. They also plan to implement a new global standard for automatic exchange of tax information and cross-border tax rulings to curb tax avoidance.
“Going forward, it will be crucial to ensure its effective implementation, and we encourage the G20 and the OECD to establish a targeted monitoring process to that end,” said a joint statement from the G7 leaders. “We commit to strongly promoting automatic exchange of information on cross-border tax rulings. Moreover, we look forward to the rapid implementation of the new single global standard for automatic exchange of information by the end of 2017 or 2018, including by all financial centres subject to completing necessary legislative procedures. We also urge jurisdictions that have not yet, or not adequately, implemented the international standard for the exchange of information on request to do so expeditiously.”
The G7 leaders also confirmed their commitment to promote greater transparency about the beneficial owners of business entities. “We recognise the importance of beneficial ownership transparency for combatting tax evasion, corruption and other activities generating illicit flows of finance and commit to providing updates on the implementation of our national action plans,” said the joint statement. “We reiterate our commitment to work with developing countries on the international tax agenda and will continue to assist them in building their tax administration capacities.”
At the same time, the G7 leaders recognised the need to avoid double taxation on the profits of multinationals and said they would work to establish binding mandatory arbitration mechanisms to safeguard trade and investment.
“Moreover, we will strive to improve existing international information networks and cross-border cooperation on tax matters, including through a commitment to establish binding mandatory arbitration in order to ensure that the risk of double taxation does not act as a barrier to cross-border trade and investment,” said the statement. “We support work done on binding arbitration as part of the BEPS project and we encourage others to join us in this important endeavour.”