G20 to load up for countering offshore tax evasion

The Group of 20 countries have agreed to proactively cope with tax avoidance and offshore tax evasion by companies through collaboration in taxation administration among member states.

According to Korea’s Strategy and Finance Ministry on Sunday, finance ministers and central bank chiefs of the G20 economies announced a joint communiqué that calls for these and other measures, as they convened the two-day meeting in Washington, the U.S. on Friday. At the communiqué, the G20 members said, “We strongly encourage all jurisdictions to sign or express interest in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.”

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters is an agreement, which countries sign to share information and cooperate in taxation with each other, and if a country joins, it can automatically exchange financial information with other members. Currently, 43 countries have signed the treaty, and Korea joined in July last year.

A source at the Strategy and Finance Ministry in Seoul said, "The measure constitutes reinforcement of collaborative efforts to prevent tax evasion, and we have affirmed that Korea’s efforts to secure taxation sources, including reduction of underground economy, also complies with the international trend.”

The G20 pointed out that quantitative easing by some advanced countries, including Japan, could generate side-effects in the overall global economy.

Notably, the G20 specifically noted that Japan’s monetary policy is meant to resolve deflation and shore up domestic consumption,” thereby emphasizing that quantitative easing should not be used as a measure of exchange rate policy. "We will be mindful of unintended negative side effects stemming from extended periods of monetary easing," said the G20 members.

jarrett@donga.com