Thursday, 24 April 2014  -  24 Jumada Al-Akhir 1435 H
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World’s economy tops G20 agenda

 

 

MOSCOW — Tax evasion and splits over the state of the global economy as emerging markets slow down are the main subjects for a meeting of G20 countries on Friday and Saturday.

Finance ministers and central bankers from the Group of 20 top advanced and emerging nations will meet in Moscow for their third gathering this year, to prepare for a G20 summit at the beginning of September in Saint-Petersburg.

The summit will focus on progress over cooperation against tax evasion and on regulating finance.

One government source, who declined to be named, commented that the priority was "to make headway toward greater transparency, toward stronger action against countries with uncooperative legal systems."

At the last G20 meeting in Washington in April, a joint statement called for international cooperation to attack banking secrecy.

The task of organizing this was given to the Paris-based Organization for Economic Cooperation and Development, the policy research center and forum for advanced democracies.

The OECD is to report on its work to the G20 on Friday.

A key objective is to tackle techniques of what is known as tax optimization, meaning accounting arrangements used by multinational businesses to minimise their tax bills.

Among companies which have been in the spotlight recently for using legal, but controversial, methods of booking profits in low-tax countries are US giants Google, Amazon and Starbucks.

At the OECD, the head of the tax policy and administration unit Pascal Saint-Amans said: "There is a good consensus within the G20."

So-called tax havens may be used for tax evasion, which is illegal, or avoidance which may be legal but can be highly controversial.

The issue has become a hot subject, particularly in countries where austerity measures are associated with tax increases and high unemployment.

The role havens play has been highlighted this year by the "Offshore Leaks", a series of revelations about assets lodged in tax havens by high-profile people.

"The techniques of tax evasion and tax havens are the top target for governments and the ministers are going to want to be sure that it is being treated as such," in the run-up to the summit in September, economist Chris Weafer at consultants Macro Advisory told AFP.

The tax issue is also a chance for the G20 countries to speak with one voice at a time when they are divided over the state of the world economy. Weafer observed that "we could well see a split" between rich countries and emerging economies on this.

The 17-nation eurozone is stuck in recession and the economy of the United States is struggling to gain momentum. The high rate of growth of emerging economies, which has helped to support global activity, is showing signs of slowing and this is also a cause for concern.

China, with the second-biggest economy in the world, has just reported that its economy grew by 7.6 percent in the first half of the year, confirming that the speed of its recent rapid growth is slowing.

This is a worry for countries which provide China with raw materials and products.

At the beginning of July the International Monetary Fund lowered its forecasts for growth of the economies in China, Brazil, South Africa and Russia.

US Treasury Under Secretary Lael Brainard said on Monday that the United States wanted to hear from the Chinese how they intended to support demand and also what action leading European nations and Japan had in mind. The Europeans should stimulate demand and growth, he said.

However, a German source said against the background of the still simmering European debt crisis that Germany would put the stress on debt reduction.  — AFP

 
   
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