Germany’s finance minister says multinationals must pay fair taxes

BERLIN - Reuters

This file photo shows German Finance Minister Wolfgang Schaeuble talking to the press prior to an extraordinary Eurozone meeting in Brussels. AFP photo

German Finance Minister Wolfgang Schaeuble will push to stop multinational companies shifting profits to tax havens and is confident the Group of 20 nations meeting in Moscow this week will agree on common standards.

Schaeuble told Reuters in an interview yesterday that an action plan to be presented to G20 finance ministers by the Organisation for Economic Co-operation and Development would set clear and ambitious targets on tax evasion.

“Multinational companies, too, must pay adequate taxes, and they must do so where they are economically active,” Schaeuble said in the interview, conducted by email. “The OECD action plan as it is on the table in Moscow now is a milestone in this respect.”

A preliminary draft of the OECD’s plan, seen by Reuters, showed the organisation had already identified a number of specific profit-shifting schemes and aimed for agreement on specific changes to international tax rules in one to two years.

Corporate taxation has become a hot political topic since media reports highlighting how multinationals reduce their tax bills struck a nerve with voters themselves increasingly pinched by higher taxes.

“I believe that by now there is broad international consensus that states should not aggressively compete for each other’s tax bases. I am optimistic that we can agree on mutual standards. The action plan gives us clear and ambitious goals on the timing.”

Fed decision to be on agenda in Moscow

Finance ministers and central bankers meet at a sensitive time with the U.S. Federal Reserve intent on slowing, then exiting a bond-buying program that created $85 billion a month, news that has sent ripples through emerging nations.

“The Fed announcement led to a broad echo especially in emerging nations. So, I can imagine that the topic will be discussed in Moscow, especially as the central bankers, the relevant actors, are at the table with us,” Schaeuble said.

Fed Chairman Ben Bernanke, who will not be present in Moscow, has stressed he will only stop the money-printing press if he sees strong evidence of a U.S. recovery.