The United States threw its weight behind a push to make global taxation reform a key goal for the Group of 20 advanced and emerging economies, supporting moves to close loopholes used by major multinationals to avoid tax.
U.S. Treasury Secretary Jack Lew backed the need for tax harmonization, saying on Friday that all nations should adopt the automatic exchange of information as a global standard.
Continue Reading Below
"The G20's work on tax cooperation is among our most important new initiatives," Lew told reporters in Sydney, ahead of the weekend meeting of G20 finance ministers and central bankers.
Australia, as host of the meeting and one of the most heavily reliant countries in the Organization for Economic Cooperation and Development (OECD) on corporate tax receipts, is pushing hard for reform.
Big budget deficits and revelations that companies such as Apple
Lew and Australian Finance Minister Joe Hockey announced on Friday they had struck a deal under the United State's Foreign Account Tax Compliance Act that targets "non-compliant" taxpayers using foreign bank accounts.
International Monetary Fund Chief Christine Lagarde, also in Sydney for the meeting, singled out accounting for revenues from new global digitized businesses such as Google and Apple as a "big ongoing problem".
Lagarde called for a radical rethink of international tax arrangements, saying governments needed to take into account intangible products provided by companies where the locality of the headquarters or service center is uncertain.
"They have to invent new concepts just as quickly and as well as those companies are inventing their optimization schemes," Lagarde told Australian Broadcasting Corp.
Such measures would build on an OECD draft plan backed by the G20 in September that advocated allowing countries to ignore inter-company contracts which were aimed at channeling profits into tax havens.
"This is not against multinationals," OECD Director-General Angel Gurria told reporters on Friday. "Multinationals have to have legal assurance that they're not going to be double-taxed, but they have to contribute; their fair share has to be put on the table."