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G20 Finance ministers tackle tax evasion
July 19, 2013, 10:33 pm

G20 Finance ministers will likely suggest the issue of tax evasion be high on the agenda at the Summit in September [Xinhua]

G20 Finance ministers will likely suggest the issue of tax evasion be high on the agenda at the Summit in September [Xinhua]

Finance ministers and Central Bank governors from G20 leading economies met in Moscow Friday to push forward a plan for greater taxation transparency of multinational companies.

Corporate tax evasion is at the top of the agenda for the two-day meeting, but the delegates will also discuss reform of the global financial architecture, energy sustainability and financing the fight against climate change, and currency depreciation fears in emerging markets.

Last month G8 countries agreed to exchange information to make taxation more transparent.

Russian Finance Minister Anton Siluanov said taxation transparency is likely to dominate the agenda of the G20 St. Petersburg Summit this September.

The Organization of Economic Cooperation and Development (OECD) has presented its plan to tackle loopholes that currently allow multinational corporations to avoid paying billions of dollars in taxes.

The OECD has suggested mandating companies to pay taxes where their production is located instead of where they are formally registered.

The plan also stipulates companies be forced to reveal their financial beneficiaries.

Siluanov said that the issue of investment financing for economic growth is also likely to be high on the agenda.

Siluanov told Russia 24 TV network that Russia plans to raise the issue of midterm guidelines of debt policy of countries with high state debt, which he described as a critical issue.

“High state debt creates uncertainty for investors in the countries where this debt has been accumulated. That’s why discussing state debts and paying off the accumulated debts worries investors. And we believe it’s expedient to raise the issue of midterm guidelines of the countries with high state debt at the meeting of finance ministers,” Siluanov said.

The current G20 meeting, the third this year to include finance ministers, will likely draft a communiqué that will call for an action plan to boost jobs creation and economic growth.

In the meantime, and on the sidelines of the meetings today, central banks of the BRICS countries discussed the establishment of the BRICS Stabilization Fund.

The construction of the $100 billion contingency reserve arrangement announced during the Durban BRICS Summit in March is seen as a shield for BRICS economies during times of currency volatility.

The Fund will also help BRICS countries maintain their balance of payments in case the capital account of one of the members deteriorates.

The Central Banks of the five countries will finance the project and will reserve a sum that will be used if needed to help one another.

“We are working on the issues of providing liquidity from this Fund, conditions, role of the IMF here, coordination of this fund with the IMF’s policy,” Siluanov said.

At the BRICS summit in Durban, the countries discussed the shares of the participants in this fund with China reserving $41 billion, South Africa  – $5 billion, and Brazil, Russia, and India – $18 billion each.

The details of the management of the fund are yet to be etched out.

By Daria Chernyshova in Moscow, Russia for The BRICS POST, with inputs from Agencies