Politics 19 July 2013 Five questions answered on the crackdown on tax avoidance G20 finance ministers make an announcement. Sign up for our weekly email * Print HTML G20 finance ministers meeting in Moscow today announced a global crackdown on tax arbitrage by multinational companies. We answer five questions on the proposed crackdown. Why has this crackdown been launched? It’s been announced in a bid to tackle base erosion and profit sharing by multinational firms and hopes to address recent sustained criticism of the low tax paid by firms such as Google, Amazon and Starbucks. It’s hoped it will push up tax rates for firms that specifically arrange their tax affairs so they only pay a small amount. What’s the plan? An action plan has been drawn up by Paris-based Organisation for Economic Co-operation and Development (OECD) for the G20. It sets out more than a dozen ideas to block gaps between national tax systems and tackle practices that artificially separate taxable income from the activity that generates it. It includes proposals to tackle abuses of tax and to prevent tax avoidance by shifting intangibles between group companies. It also aims to neutralise the impact of “hybrid” structures used to reduce billions of dollars of tax. Other countries that are outside the OECD, such as China and India, will be invited to take part in the programme. What will the outcome be? This will depend on the co-operation of governments over the next two years, but it is largely hoped that “the golden age of ‘we don’t pay taxes anywhere’ is over,” as said by Pascal Saint-Amans, the top tax official at the OECD. But this may not happen if commitments of business and governments dwindle. What have the experts said? Will Morris, chair of the BIAC’s tax committee, speaking to The Financial Times, said: “In some areas, the international tax system has not kept pace with globalisation and changing business models, and it is appropriate to look again at those areas and consider, based on all the evidence, whether any changes are required.” What have the critics said about this initiative? A campaign group that pushes for tax reform, The Tax Justice Network, also speaking to the FT said: “piecemeal recommendations for states to apply patches to the increasingly leaky international tax system...would be like trying to plug the holes in a sieve.” › In search of cricket on the BBC: shall I rend my garments now, or later? Photograph: Getty Images Heidi Vella is a features writer for Nridigital.com Subscribe from just £1 per issue More Related articles Jeremy Corbyn has found a vulnerable spot on Theresa May and trade Politicians are worried that their pensions are destroying the planet. Is yours? Nap Store: Where did all these new mattress start-ups come from?