Issues related to global corporate tax avoidance top the discussion agenda at G20 Moscow Summit, with UK, France and Germany to develop a common position on new tax rules aiming to force corporations to pay their taxes:
The UK Chancellor George Osborne and his French and German counterparts are to call for global tax rules to clamp down on corporate tax avoidance. The three will seek backing from other leaders at the G20 Moscow Summit. A survey carried out by the OECD found that multinational companies could exploit gaps between the tax rules in different countries they operated in. Meanwhile, a leaked draft communique indicated G20 finance ministers would not chide Japan for weakening the yen. The move comes as another giant international company has been accused of ducking its tax obligations. Facebook allegedly paid no corporate income tax in the US last year, and instead reclaimed $451m in taxes from the Internal Revenue Service, despite recording profits of over $1bn, US lobby group Citizens for Tax Justice has claimed. Thanks to tax deductions the social network can claim on stock options granted to its executives as part of its recent listing on the Nasdaq stock exchange, the company stands to benefit from a further $2bn of tax deductions in the future, the lobby group alleged. Facebook could not be contacted by the BBC for comment.
Global economic crisis and especially the tragic economic situation in the eurozone brings on the table the big dilemma about solving the problem by following austerity recipes or economic growth policies:
The Group of 20 major economies struggled on Friday to find common ground on currencies and borrowing, exposing rifts between advocates of a dash for growth and supporters of more austerity to revive the world economy. A meeting in Moscow of finance officials from the G20 nations, which account for 90 percent of the world’s gross domestic product and two-thirds of its population, looked likely to be dominated by sparring over Japan’s expansive policies that have driven down the value of the yen. A row was also brewing between Europe and the United States over extending a promise to reduce budget deficits beyond 2016. A pact struck in Toronto in 2010 will expire this year if leaders fail to agree at a G20 summit in St Petersburg in September. The G20 forum, which put together a huge financial backstop to halt a market meltdown in 2009, is back in the spotlight after a week in which the Group of Seven rich nations tried, and spectacularly failed, to speak with one voice on currencies. The G7 has long been the powerhouse of financial diplomacy. But tension between Washington and Tokyo has risen over new Prime Minister Shinzo Abe’s drive to end two decades of deflation. The G7 issued a joint statement on Tuesday reaffirming “our longstanding commitment to market determined exchange rates”. Yet the show of unity was quickly undermined by off-the-record briefings critical of Japan. An apparently frustrated European Central Bank President Mario Draghi said in Moscow that loose talk on currencies was “inappropriate, fruitless and self-defeating”.
G20 Moscow Summit leaders enter talks divided over currency, debts | Economy …
G20 Moscow Summit officials struggled to find a common form of words on currency manipulation ahead of a summit on Friday at which divisions within the group over growth versus austerity looked set to flare back into life. The head of the European Central Bank criticised wrangling over currencies ahead of the meeting of Group of 20 financial leaders where Japan is expected to escape any censure for its expansionary policies. Speaking in Moscow, ECB President Mario Draghi said recent sparring over currencies was “inappropriate, fruitless and self-defeating” and U.S. Treasury official Lael Brainard warned against “loose talk”. Draghi also said the euro’s exchange rate was in line with long-term averages, suggesting little alarm yet about its recent climb choking off prospects of economic recovery. The currency market was thrown into turmoil this week after the Group of Seven powers – the United States, Japan, Germany, Britain, France, Canada and Italy – issued a joint statement stating that domestic economic policies must not be used to target currencies. Tokyo said that reflected agreement that its aggressive monetary and fiscal policies were appropriate but the show of unity was shattered by off-the-record briefings critical of Japan.
G20 Moscow Summit leaders to question austerity – Russia News Cloud
The need and the scope of belt – tightening in crisis stricken countries is due to be one of the central topics during the G20 Moscow Summit, as economic growth around the world is getting increasingly stifled by austerity measures. It is becoming increasingly evident that austerity brings almost no fruit. A two – day G20 Mscow Summit is going to examine the problem. “We’ll propose to change the Toronto agreements, possibly by changing its parameters. They are not met at the moment, and they should be changed,” the Wall Street Journal (WSJ) quotes Anton Siluanov, Russia’s Finance Minister. In 2012 G20 leaders agreed in Toronto to cut their budget deficits 50% by 2013, as well as at least stabilize their government debts by 2016. Economists calculated then that a €1 cut in the budget would cost about 50 European cents in lost growth, the real figure looks more like €1.50 for each €1 cut, according to the IMF and the G20′s economic advisers. The most recent economic data shows recovery has so far been anaemic, with Thursday’s figures showing the steepest year on year contraction in the eurozone since 1Q 2009. Even the area’s economic powerhouses – Germany and France – slid into the red in the last quarter of 2012, compared to the previous 3-month period. The latest report on the US economy was also an icy shower, as the country’s GDP showed a 0.1% contraction in 4Q 2012, while everybody expected it to grow 1.1% during the quarter. ”A third of the G20 is in recession. We need to do more to get people back to work and Toronto 2.0 is not the right answer,” U.S. Treasury Under-Secretary Lael Brainard told a briefing earlier this week. ”We must avoid jeopardizing the recovery with a premature shift to restraint.” Economic activity is stabilizing though at low levels, President of the European Central Bank, Mario Draghi said.“We see volatility going down. All the interest rates are going down. The crisis started with lack of funding. Large corporates are now able to fund, they are issuing significantly, 55% of issuance comes from non-core countries. Deposits of the banking system have stabilized. Banks also fund themselves. A range of factors show the situation is normalizing.”
G7 financial diplomacy moves continue over Japan’s devaluation policies of the yen:
It won’t quite be hand-to-hand combat, but ‘currency wars‘ will come to Moscow on Friday as finance officials from the Group of 20 nations spar over Japan’s expansive policies that have driven down the value of the yen. The G20 forum, which put together a huge financial backstop to halt a market meltdown in 2009, is back in the spotlight after a week in which the Group of Seven rich nations tried, and spectacularly failed, to speak oncurrencies with one voice. The G7 has long been the powerhouse of financial diplomacy. But tension between Washington and Tokyo has risen over new Prime Minister Shinzo Abe’s bid to end two decades of deflation. The G7 issued a joint statement on Tuesday reaffirming “our longstanding commitment to market determined exchange rates”. Yet the show of unity was quickly undermined by off-the-record briefings critical of Japan. Hosts Russia say the G20 Moscow Summit – which includes leading emerging markets and accounts for 90 percent of the world economy – will back the thrust of the G7 text when they issue their communique on Saturday. But not necessarily word for word. ”The language may differ (from the G7), but the intent will remain the same,” Finance Minister Anton Siluanov told Reuters.
Finally, the global need for taken decisive action for reviving the global economy is to be one of the basic conclusions at G20 Moscow Summit, at least theoretically…