We are certainly concerned, like other international organizations, with issues of tax evasion and tax avoidance. Let me distinguish between the two. Tax evasion is finding illegal means of avoiding paying taxes by individuals and corporates through secrecy, frequently by using offshore locations and structures. In contrast, tax avoidance is what all companies and individuals try to do by finding legal means to minimize their tax liability. Both tax evasion and tax avoidance can be a challenge, but we feel that progress is being made.
With regards to tax evasion there is now in place a peer-reviewed anti-secrecy and exchange of information standard under the aegis of the Global Forum on Tax Transparency and Exchange of Information for Tax Purposes. This standard now has been “upgraded” to the automatic exchange of tax information (AEOI) among countries. This is a huge step forward vis-à-vis 10-20 years ago. With regard to tax planning and avoidance techniques by multinational enterprises, the OECD/G20 Base Erosion and Profit Shifting (BEPS) project is not a total answer to the problem but it is a concerted effort to deal with the most egregious problems in tax issues.
The European Union has itself taken recent steps among its members, which are in some cases even stronger, for example, through the Anti-Tax Avoidance Directive. Just this week, the Task Force on the Digital Economy, under the aegis of the OECD, has been meeting in regard to imposing taxes on income arising from very-hard-to-tax intangible assets and digital business activities.
At the IMF, we are particularly concerned about the spillover effects from one country to others of tax evasion and tax avoidance. We provide technical assistance to around 100 countries per year and we do some in-depth studies on corporate taxation issues in our annual economic consultations with member countries. The IMF is making efforts, the international community is making efforts, but this is going to be an ongoing process in dealing with these issues.
Answered by: International Monetary Fund (Europe Office)
- Are CUM EX share deals still happening, and why is/was it not illegal?
- Why can banks and financial investors involved in CUM EX extract these huge amounts of tax money and nobody notices it?How did CUMEX deal go unnoticed for such a long time? What went wrong with the regulatory system that allowed this to go on?
- What’s the deal with offshore banks?
- How come that company founders of small enterprises pay a lot of taxes when at the same time large groups (especially in the digital industry) generating billions in sales pay very little?
- What is the tax on investment income compared to the tax on labour income in European countries?
- Why is the Tobin tax not introduced yet?