Cairns: OECD chief Angel Gurria on Saturday handed the G20 recommendations on the biggest changes to international tax rules in more than a century in a bid to tackle corporate tax strategies that are costing countries billions.
The secretary-general said the plan, which seeks to close international loopholes used by multinational firms to avoid paying large amounts of tax, was "the most prominent step towards the modernisation of the international tax system in a hundred years".
Gurria revealed that global efforts to crack down on tax avoidance had already identified 37 billion euros (US$53 billion) from voluntary disclosure programmes involving 24 countries over five years, adding that "more will come".
The project "is about tackling aggressive practices which erode the tax base and artificially shift corporate profits to low- or no-tax jurisdictions", he said at the G20 meeting of finance ministers and central bankers in the Australian city of Cairns.
"These are places where there is no link between the profit generated and the underlying value-creating activity."
Australian Treasurer Joe Hockey, who is chairing the G20 meeting, said he hoped the member nations would issue a formal statement to "get on with it" in implementing the action plan, such as introducing new legislation.
The first recommendations of the Base Erosion and Profit Shifting Project (BEPS) has seven goals that would help to ensure companies pay tax in the countries where they generate income.
They were compiled by 44 countries, including all the Group of 20 members, Gurria said.
They include proposals on closing loopholes that allow for the abuse of tax treaties and to neutralise the "cash boxes" of multinational businesses kept offshore in low-tax jurisdictions, which Gurria estimated at about US$2.0 trillion.
They also seek to address the impact of the digital economy on tax issues.
Multinational firms, including digital giants such as Apple and Google, have been accused by countries of using tax strategies that minimise their payments.
"Right now there is a unifying criteria -- everybody needs the money. We`re short," Gurria said as he acknowledged the impact of the tax revenue shortfall on countries still struggling to recover from the global financial crisis.
The two-day G20 meeting in Cairns ends on Sunday.
