G20 leaders’ decisions on tax and financial transparency are welcome but they do little or nothing for poor countries, which currently lose some $160 billion a year to tax dodging by multinationals, says UK-based churches' global development agency Christian Aid.
Alex Prats, Principal Adviser on Economic Justice, commented: "G20 leaders meeting in St Petersburg have endorsed reforms which tax justice campaigners have long demanded – and that is very positive."
"However," Mr Prats continued, "although the G20 acknowledges that developing countries must reap the benefits of international work to stop tax dodging by multinational companies, it has not made any real commitments to make it possible in practice."
He continued: "Developing countries have not been invited to sit at the negotiating table on an equal footing. Nor have G20 countries done anything to strengthen the UN Tax Committee, which supports poor countries’ contribution to the negotiations but is too under-resourced to do so effectively."
"If the voices of developing countries are not heard, then the risk is that reforms to the international tax system will only benefit rich and emerging economies,’ said the NGO's spokesperson.
The OECD is leading work on international reforms to stop multinationals dodging tax. A joint briefing on the OECD process, by Christian Aid and 33 other organisations, has been produced.
Christian Aid says it also welcomes the G20’s decision to endorse automatic information exchange as the new global standard for governments helping each other to catch tax evaders - but believes the reform must benefit all countries, poor as well as rich.
Mr Prats added: "The project to implement automatic information exchange must include capable developing countries from the outset. It cannot be an instrument to tackle tax evasion only in rich countries."
"If the leaders of the G20 are genuinely concerned about developing countries raising their own tax revenue, then those countries cannot be excluded from work to implement automatic information exchange. It does not make sense to say that developing countries are not ready to implement it - some are as ready as any developed country", he said.
In relation to transparency around multinational companies’ finances, Mr Prats commented: "Requiring multinationals to report to tax authorities on their worldwide allocation of profits and tax is a welcome step but it is not enough. Many other groups, including investors and customers, have the right to know whether multinationals are paying their fair share of tax."
Christian Aid says it believes G20 leaders should also have done more in relation to the secrecy that surrounds who really owns and controls millions of companies around the world. At present, criminals including tax dodgers, money launderers and terrorists are abusing that secrecy, safe in the knowledge that it is hard or impossible for the police to trace their links with companies whose real owners are hidden.
The G8 meeting hosted by the UK in June pledged to "tackle the misuse of companies and legal arrangements", including with the publication of national action plans on the problem. The UK Government is currently consulting on the creation of a new register of the beneficial owners of some 2.5 million companies in the UK, which Christian Aid believes must be public.
Mr Prats said: "With near-silence from the G20 on beneficial ownership, it seems that we have lost some of the international momentum created at the G8 in June.
"That makes it all the more important for the UK to lead, by making its new register of beneficial owners a public one. Other countries are watching to see what we do, so the UK is a test-case for the rest of the world. If we do the sensible thing, that will greatly encourage others to follow suit. If we don’t, it will be a terrible setback for this long overdue move towards transparency," he concluded.
* Joint briefing on the OECD process and fixing the tax cracks: http://www.christianaid.org.uk/images/policy-brief-g20-fixing-the-cracks...