G20 to plug loopholes, make MNCs pay tax

SYDNEY: The world’s top economies agreed on Sunday to develop stricter rules on cross-border taxation to close loopholes that have allowed multinationals such as Starbucks, Google, Apple Inc and Amazon.com avoid paying taxes.

The Group of 20 endorsed a set of common standards for sharing bank account information across borders automatically by the end of 2015.

The G20 ministerial joint statement committed a global response to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles.

It also pledged to boost global growth by 2%, or over $2 trillion (`120 lakh crore), over five years, meeting key demands of India.

Reports of profit shifting by companies away from high tax countries to more relaxed tax regimes have sparked public inquiries in the US and UK.

US treasury secretary Jack Lew said the G20 had left the austerity debate behind and was fully focussed on growth.

“If you look where we were a year ago, debating austerity... This (weekend) was a debate about how ... our individual economies can grow and the global economy can hit the objective that is set forth in this text.”

The IMF has said the strategy could add half a percentage point to global growth annually over four years starting next year. The fund currently projects growth of 3.7% this year and 3.9% in 2015.