BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble will push to stop multinational companies shifting profits to tax havens and is confident the Group of 20 nations meeting in Moscow this week will agree on common standards.
Schaeuble told Reuters in an interview on Thursday an action plan to be presented to G20 finance ministers by the Organisation for Economic Co-operation and Development would set clear and ambitious targets on tax evasion.
“Multinational companies, too, must pay adequate taxes, and they must do so where they are economically active,” Schaeuble said in the interview, conducted by email.
“The OECD action plan as it is on the table in Moscow now is a milestone in this respect.”
A preliminary draft of the OECD’s plan, seen by Reuters, showed the organisation had already identified a number of specific profit-shifting schemes and aimed for agreement on specific changes to international tax rules in one to two years.
Corporate taxation has become a hot political topic since media reports highlighting how multinationals reduce their tax bills struck a nerve with voters themselves increasingly pinched by higher taxes.
“I believe that by now there is broad international consensus that states should not aggressively compete for each other’s tax bases. I am optimistic that we can agree on mutual standards. The action plan gives us clear and ambitious goals on the timing.”
Finance ministers and central bankers meet at a sensitive time with the U.S. Federal Reserve intent on slowing, then exiting a bond-buying program that created $85 billion a month, news that has sent ripples through emerging nations.
“The Fed announcement led to a broad echo especially in emerging nations. So, I can imagine that the topic will be discussed in Moscow, especially as the central bankers, the relevant actors, are at the table with us,” Schaeuble said.
Emerging nations have seen dramatic investment outflows since the Fed announced its exit plan, forcing policy responses around the globe.
Fed Chairman Ben Bernanke, who will not be present in Moscow, has stressed he will only stop the money-printing press if he sees strong evidence of a U.S. recovery, and on Wednesday left open the option of changing the plan if the economy shifted.
Schaeuble said a European Union paper setting out medium-term fiscal plans were an “appropriate and important” target on the way to proving the world’s 20 biggest developing and developed nations were committed to consolidating budgets.
In a document, EU finance ministers say that the lack of an agreement on a credible medium-term fiscal consolidation plan in the United States was a risk to the global economy.
The G20 has agreed that advanced economies would develop medium-term fiscal strategies by the G20 leaders’ summit in St. Petersburg in September.
Writing by Annika Breidthardt Editing by Jeremy Gaunt.