Germany and UK seek strengthened International Tax Standards

   During the latest G20 meeting in Mexico, UK Chancellor of the Exchequer George Osborne and German Finance Minister Wolfgang Schäuble underlined the need for international action to strengthen tax standards.

After discussing their concerns about the erosion of corporate tax paid by large international companies at a meeting held in Berlin recently, Schäuble and Osborne called at the G20 summit for “concerted international cooperation to strengthen international standards for corporate tax regimes”.

   Schäuble and Osborne said: “Britain and Germany want competitive corporate tax systems that attract global companies to our countries, but also want global companies to pay those taxes. That is best achieved through international action in the G20 and other relevant international fora to ensure strong standards”.

The finance ministers explained: “Global companies are a significant source of growth, investment, employment and tax in Germany, Britain and the EU as a whole. However, international tax standards have had difficulty keeping up with changes in global business practices, such as the development of e-commerce in commercial activities. As a result, some multi-national businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated, thus minimizing their tax payments compared to smaller, less international companies.”

  Schäuble and Osborne therefore urged the G20 to back the Organization for Economic Cooperation and Development’s (OECD) work on identifying possible blanks in the standards as a first step in promoting a better way of dealing with profit shifting and the erosion of the corporate tax base at global level.

Germany and UK back the OECD’s tax base erosion and profit shifting (BEPS) initiative. The first analysis report is due to be presented at the next G20 meeting in Russia in February 2013.

  Concluding, the ministers stressed: “Britain and Germany will continue to work together, and with our partners in the EU, G7 and G20, to maintain momentum on strengthening international standards.”