G7 summit needs to tackle tax havens and illicit financial flows

Media Release

May 31, 2018

Ottawa - Canadians for Tax Fairness identifies priorities that we hope to see in this week’s G7 meetings in order to remove key barriers to sustainable development.

Efforts to achieve the Sustainable Development Goals (SDGs) are being undermined by the siphoning off of resources from nations through tax evasion, tax avoidance and illicit financial flows which most impact the least developed countries and hurt the poorest and most vulnerable, particularly women and girls. Achieving the Sustainable Development Goals and the Financing for Development Agenda hinges on governments, particularly those in developing countries, being able to raise domestic resources from taxes

Currently UNCTAD estimates a 5 to 7 trillion-dollar shortfall in the financing needed to achieve the SDGs with an investment gap in developing countries of $2.5 trillion at current levels of private financing. Even with increased Official Development Assistance, there will still be a major gap.

“This summit really needs to tackle aggressive tax avoidance and illicit financial flows,” says Dennis Howlett, Executive Director of Canadians for Tax Fairness, “gender and development priorities hinge on tax fairness and the ability to mobilize public revenues.”

Just before the Summit, the federal government announced implementation of the Multilateral Instrument that is part of the initiative under the Organization for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting program (BEPS).

“It is not enough for countries like Canada to implement minimal and inadequate rules under the OECD BEPS program,” adds Howlett, “We need to see a commitment to real, coordinated action and cooperation through a strengthened UN tax agency that can set a floor for taxes.

The priority commitments Canadians for Tax Fairness wants to see in this Summit include:

  • A G7 consensus to endorse a strengthened UN intergovernmental tax agency that would oversee tax cooperation and support tax administration capacity where needed.
  • Moving to treatment of multinationals as single enterprises with taxation where the business economic substance is by implementing a unitary taxation system that allocates a firm’s worldwide income using a multi-factor global formulary (sales, assets and payroll) with a minimum corporate tax rate.
  • Pushing international agreements on and implementation of publicly accessible beneficial ownership registries of companies as a means to combat terrorist financing.

Media contact: Diana Gibson, Canadians for Tax Fairness: 780-910-0665

Read more about this issue on the Tax Fairness website.