G20 china_web

National tax authorities
must work together to
ensure that economic
activities are taxed
wherever they take place
Leader's view
5 th
Summit
2011
Elected
International tax diversity triggers aggressive tax
planning practices in an increasingly interconnected
world. This unfortunately enables low or no taxation.
National tax authorities must work together to
ensure that economic activities are taxed wherever
they take place.
Spain is playing an active role in promoting several
international initiatives to fight tax avoidance and
evasion. We are making progress towards achieving
the automatic exchange of information (AEOI) at the
international level and fighting base erosion and profit
shifting (BEPS) caused by harmful tax competition and
tax havens. The G20 plays a key role as an international
dialogue and cooperation forum.
Legislation ahead of schedule
Spain is fully committed to implementing all actions
and measures under the BEPS project, supported
by the Organisation for Economic Co-operation and
Development (OECD) and the G20. This commitment
has already led to the early incorporation into Spanish
legislation of several measures well ahead of schedule
and to the early implementation of recommendations
in the Spanish tax framework. We can highlight the
limitation of tax allowances for financial expenses as a
tool aimed at tax base erosion and the neutralisation of
the effects of hybrid products in order to avoid those notaxation
situations in which income was not subject to
tax either at the recipient’s tax base or at the taxpayer’s.
Spain will be among the first countries to implement
the country-by-country report through which any
multinational enterprise (MNE) is obliged to report
annually the taxes it pays in every state where it
operates. As of 2016, MNEs with residence in Spain
and the status of their parent company must provide
Spanish tax authorities with information on taxes,
incomes, gross profit, the amount of tax due and paid,
and net book value of tangible assets on a country-bycountry
basis. These reports will enable a transparent
and accurate picture of financial and tax information
relating to the global allocation of income and taxes
by an individual MNE, among other indicators of its
economic activity.
The Spanish Government is encouraging this work
stream within the European Union. In December 2014,
in a letter addressed to the President of the European
Commission, I pointed out several priority areas for
immediate action, including the enactment of an
anti-evasion directive in line with the BEPS project.
Such a directive must be supplemented by a code of
best practices that reflects the states’ commitment to
implement the measures responsibly and in good faith.
There have since been significant advances, such
as approval by the European Commission of the Anti
Mariano Rajoy
Prime Minister, Spain
Tax Avoidance Package in January 2016. It contains
concrete measures to prevent aggressive tax planning,
boost tax transparency and create a level playing
field for all businesses in the European Union. It also
includes a proposal for a council directive laying down
rules against tax avoidance practices that directly affect
the functioning of the internal market, to ensure that
companies pay tax wherever the profits are generated by
including measures on artificial profit shifting or double
exemption situations, and rules on interest allowance
in line with those anti-BEPS initiatives developed in the
G20-OECD meetings. We are also playing a very active
role in fighting fraud and tax evasion through
the international exchange of tax information.
The Spanish Government has fostered traditional
bilateral agreements to avoid double taxation and
reduce tax opacity, always abiding by the OECD
transparency standards. We also strongly promote the
Multilateral Competent Authority Agreement so that
the exchange of financial account information becomes
automatic and takes place according to common
reporting standards. This will provide tax authorities
with a powerful new tool to fight tax avoidance and
evasion. Spain will be among the first countries to adopt
this system envisaged for 2017.
Support and endorsements
We support the AEOI directive on tax rulings, which
comes into force in 2017 and obliges members
to exchange information automatically on tax
arrangements with cross-border effects and on
transfer pricing agreements. We have also endorsed
the amendment of the directive on administrative
cooperation in taxation, which sets out practical
arrangements for exchanging information on MNEs.
Along with its G20 European colleagues of France,
Italy, Germany and the United Kingdom, Spain has
proposed creating a national register of ultimate
beneficial owners by identifying individuals who
control corporations and trusts, and exchanging
information about them. The initiative was endorsed
by 40 countries at the Anti-Corruption Summit held
in London in May 2016.
I am convinced that these rules, procedures
and political agreements regarding international
cooperation are the only way forward for better
control over taxing business activities, avoiding
aggressive tax planning and reinforcing our fight
against fraud. This will form the basis for our systems
to gain greater efficiency and capacity for fairer and
more commensurate taxation for all our citizens. In a
globalised world, the motto ‘strength through unity’ is
more relevant than ever. The path is already set out. We
only need to persevere. Spain, of course, will do so. G20
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