U.S. Treasury is Finalizing Rule to Combat Tax Evasion
Apr 18, 2016 08:41 AM EDT
U.S. Treasury Secretary announced support on restraining tax evasion during his speech in the International Monetary and Financial Committee (IMFC) press conference at the IMF headquarter on Saturday. Secretary Lew said that the U.S. has planned a rule to combat shell companies.
In his statement for the International Monetary and Financial Committee (IMFC) press conference, as released by US Department of the Treasury, Secretary Lew said that the U.S. government are finalizing a rule to target the tax evading shell companies. Mr. Lew also call all countries to exchange financial account information automatically in the wake of Panama Papers leak.
"Tax evasion and tax avoidance hurt government budgets, reduce the equity of our tax systems and hinder global growth. The effective implementation of international standards is a key issue for the United States. To combat the misuse of companies, we are finalizing a rulemaking that would require financial institutions to identify the beneficial owners of new customers that are companies. In addition, we are about to propose a regulation that would require the beneficial owners of single-member limited liability companies to identify themselves to the Internal Revenue Service, thus closing a loophole that some have been able to exploit," secretary Lew said.
In regard to call for International cooperation, international leaders responded positively. As Dow Jones Business News reported, China's finance minister Lou Jiwe who chairs the G-20 pledged the result based on the Organization for Economic Cooperation and Development (OECD) report. On Friday, G-20 officials had called OECD to report the list of countries and jurisdictions that haven't signed up to new international standards on tax transparency and information sharing.
The group of 20 worlds-largest economies has warned the tax havens that hide billions of dollars in potential revenue critical to domestic growth plans around the world. At the same time, The Guardian reported that World Bank also warned regarding negative effects of tax evasion. World Bank president Kim Jim Yong had emphasized the danger of tax evasion to global economy at the opening of annual Spring Meetings between IMF and World Bank.
"When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity," Kim said.
The international cooperation to combat tax evasion also supported by IMF Managing Director Christine Lagarde. "There is one thing which has not gone very global and that is taxation, which is still very much a local affair associated with national sovereignty," she said. "International cooperation has to really be significantly improved."
U.S. Treasury Secretary Jacob Lew supported international effort to crackdown tax evasion during press conference at the IMF headquarter on Saturday. G-20, IMF and World Bank have pledged to join effort to combat tax evasion and tax havens following the Panama Papers leak.