At G8 Summit, Agreement Reached on Tax Fraud while Divisions Remain over Syria

  

The eight leaders of the G8 nations, along with the Presidents of the European Council and European Commission, at Lough Erne, Northern Ireland. Photo: Pete Souza for Wikimedia Commons.

The eight leaders of the G8 nations, along with the Presidents of the European Council and European Commission, at Lough Erne, Northern Ireland. Photo: Pete Souza for Wikimedia Commons.

On June 17 and 18, the leaders of the G8 nations gathered in Lough Erne, Northern Ireland for their annual summit. At the top of the agenda: tax fraud and the Syrian crisis.

In an effort to address tax fraud across the world, G8 members had asked the Organisation for Economic Cooperation and Development (OECD) for a report outlining a fast and efficient method for the automatized exchange of tax data. The report, introduced by General Secretary of the OECD Angel Gurria, details a system that will apply worldwide and include the taxpayers of every country.

With this Lough Erne declaration, the system of data exchange proposed by the OECD will replace the current system of exchange on demand, which is only applied in cases of investigation.

In order to implement this new system, G8 members have to fulfil various obligations. They first have to define the nature of the information detailed by the exchange of data. This point is to concern all forms of income, including those from interest-bearing and offshore accounts, as well as the financial institutions that have to provide data to administration, like banks for example.

The next step is to create a legal basis to organise the exchange of data and to ensure the confidentiality of data. To that end, G8 members can ratify the new OECD multilateral tax convention, which strictly regulates the cooperation between states. Finally, new technical and commonly applied standards, for instance for data encryption, have to be created. The aim is to finalize the imposition of these standards at the next G20 Summit in Saint Petersburg.

While some countries do not wish to join the new system outlined in the declaration, many will be involved in the process of strengthening tax cooperation by signing onto the new multilateral tax convention. This convention is a commitment to cooperate in case of a request for assistance made by a state. More than 70 states have already ratified this convention. More should join in the coming weeks, including China and Switzerland, the latter being famous for the secret accounts opened by foreigners there.

While this constitutes a major step in the international tax sphere, such progress has not been made on the Syrian crisis. Despite negotiations among the G8 nations, efforts have come to little, with Russian Federation President Vladimir Putin’s continued defense of the regime of Bachar Al-Assad a major stumbling block.

As a result, no precise date has been given for a peace conference on Syria. The only concrete point on which the G8 was able to agree is the need to find a political solution to the crisis, one that will result in a democratic Syria.

G8 members called on the Syrian government and the opposition forces alike to dismantle organisations linked to Al-Qaida, and they declared their intention not to pay ransom should a national be kidnaped. Despite an inability to come to greater agreement over a resolution to the crisis, it was agreed that 1.1 billion euros (1.5 billion dollars) will be provided for humanitarian assistance to the Syrian population.

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  1. […] The leaders of the G8 nations gathered in Lough Erne, Northern Ireland for their annual summit. In an effort to address tax fraud across the world, G8 members had asked the Organisation for Economic Cooperation and Development (OECD) for a report outlining a fast and efficient method for the automated exchange of tax data. While this constitutes a major step in the international tax sphere, such progress has not been made on the Syrian crisis. Efforts have come to little, with Russian Federation President Vladimir Putin’s continued defence of the regime of Bachar Al-Assad a major stumbling block. […]

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