Pretoria - The Group of 20 countries will soon share tax information to find better ways to curb cross-border tax evasion and profit shifting by multi-national companies.
Speaking to journalists in Pretoria after attending the G20 Summit in St Petersburg in Russia last week, Finance Minister Pravin Gordhan said the world leaders have also agreed to up their level of cooperation in a bid to boost global inclusive growth.
G20 leaders signed a New Tax Plan on Friday, which would make it more difficult for companies to hide money in tax havens and force them to pay tax in the countries where they make profits.
“On the base erosion, profit shifting and acting against tax evasion globally, the key milestone that was reached was an agreement … on the automatic exchange of information. Until now, the regime for interaction between tax authorities from different countries relied on double taxation treaties, which provided for the exchange of information but that exchange of info was per request.
“What we have now is a situation where administrations will agree on a protocol informed by a process through the EOCD (Organisation for Economic Co-operation and Development), where a level of discretion on whether you want to supply something or not, a greater degree of automatic responses will become [central to the] process,” he said.
Gordhan also said, meanwhile, that all leaders at the summit had also agreed to cooperate to ensure that countries – both emerging and developed economies – would work hand in glove to ensure that policies are implemented to support domestic and global growth and financial stability.
“There is an absolutely crucial need for the G20 to take a central role… and find areas of cooperation and synergy… to ensure both [emerging and developed] economies continue to better utilise [resources]...”
He said individual countries would implement their own initiatives to fight poverty, inequality and unemployment.
According to the St Petersburg Action Plan, South Africa would, amongst several interventions, take steps to restrict energy constraints by “starting the process to build a third coal-fired power plant and finalise the process of authorising shale gas exploration in a responsible and environmentally friendly manner”.
Gordhan also said that the BRICS (Brazil, Russia, India, China and South Africa) nations met on the sidelines of the summit to discuss and finanilse the formation of the New Development Bank.
While he could not give further details on the bank’s structure and on the funding of the bank, he said progress had been made and that Brazil was the nation that was appointed to lead the process of forming the bank until the next BRICS summit in Brazil.
Lungisa Fundile, the director-general at the ministry – who attended the BRICS meeting in Russia – said leaders decided it would be in the interest of their countries as emerging markets to stand side-by-side to bolster economic growth and to continue contributing to a “virtual pooling of reserves” towards to the bank.
He also said once the bank had been set up, it would be up to individual BRICS countries to decide when they would need funding from the bank and for what purpose such funds would be for.
According to reports, the bank would have an initial subscribed capital of US$50 billion. – SAnews.gov.za
