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June 24, 2013

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G8 Meeting Purportedly a Success on Tackling International Tax Evasion Issues

In a meeting of the eight wealthiest countries in the world, the Group Eight (G8) discussions on how to deal with international tax evasion was so successful that the UK’s Chancellor of the Exchequer and Second Lord of the Treasury (highly historical and fancy terms for treasurer) George Osborne stated that “more was accomplished in the last 24 hours than in the past 24 years.”

Of significance in the proposals and ideas bounced back and forth, companies would have to reveal the names of their true owners to tax authorities, create more practical methods of taxing multinationals and ensure taxes are paid in the countries in which the profits were made, and, most controversially, a public register of “so-called beneficial owners” open to all countries’ tax authorities. The last proposition has met opposition from many countries, including former British dominion Canada.

While such optimism is a great thing to hear after the leaders of the wealthiest countries in the world gather, it should always be taken with (a lot more than) a grain of salt; making such major shifts takes a lot more than simple agreements in principle by heads of states of different countries. This is especially so since the taxation system in place dates from the 1920’s after the first world war from the time of the now defunct League of Nations. Only time will tell if these proposals will become reality.

Offshore Accounts/International Tax Disputes