Financial G20 has put tax transparency above Brexit

Financial G20 has put tax transparency above Brexit


Moscow. July 24. A regular meeting of the financial “twenty”, which this year is chaired by China, did not bring global surprises: downside risks to global growth in oil prices and geopolitics remain, the decision to withdraw Britain from the EU in the final communiqué mentioned only in General terms, and the coup attempt in Turkey and is not reflected in the final document.

“We all (Brexit) has experienced, the markets have experienced, and calmed down, respectively, calmed down policy. It is understood that the consequences of the referendum is a long process of negotiations, where anything can happen. The topic was discussed as the background, no more”, – told reporters, Deputy Finance Minister Sergei Storchak following the meeting of the financial G20.

And representatives of the Central Banks saw Brexit even the pros, as the referendum results checked the strength of the national banking system.

“All were pleased with the willingness of markets to react calmly to such extraordinary circumstances,” said Deputy Minister of Finance of the Russian Federation.

In the communiqué of the G20 traditionally contains an assessment of the rate of recovery of the world economy, which is “weaker than we would like.” The document notes that downside risks to the economy remain in conditions of volatile oil prices and low inflation in many countries. The volatility of financial markets, geopolitical conflicts, terrorism and the problem of refugees complicate the situation in the global economy, the document says.

Britain’s decision to withdraw from the EU, creates uncertainty for the global economy and its implications yet to be explored, the point of the G20 countries.

Communiqué no coup

Another regional topic – the attempted coup d’état in Turkey – at the request of the Turkish side, first appeared in the draft communiqué of the G20 countries have come forward to support the efforts of the legitimate government of Turkey to maintain economic stability and prosperity. But in the final version of this paragraph did not hit.

A week before the meeting of the financial G20 group of the Turkish military tried to carry out an armed coup, which failed. In Turkey arrested about 6 thousand people suspected of involvement in an attempted armed overthrow of the government and imposed a state of emergency.

“The logical desire of the delegation (Turkey – approx.ed.) try to enlist the support of the internal policy of the President on this forum. But we do not agree about what words to use (the communiqué) as colleagues wanted little more than generalities about the support,” – said Storchak.

Turkish delegation in Chengdu was represented by Deputy Prime Minister Mehmet Simsek.

The crisis of overproduction

The problem of overproduction of steel, which was discussed in the beginning of July, the trade Ministers of the G20 countries, was reflected in the communique “financial twenty”.

The decrease in consumption and increase in government support of the metallurgical sector in individual countries has once again created a problem of excess capacity that existed in 1990-ies and 2000-ies. As the market can not absorb all produced steel, this leads to lower prices and distorted signals to investors. Losses in this case are all – as the steel industry, and consumers losing from market volatility.

There is a problem in China, which has recognized the existence of excess capacity in the steel industry in the country. However, he initiated the inclusion of the item in the communiqué, and the US and the EU.

The problem of excess production capacity, exacerbated by the slow recovery of the global economy and weak demand, had a negative impact on trade and jobs, according to the final document.

“Subsidies and other state support could lead to distortions in the market and become one of the causes of global excess capacity, and therefore require attention”, – said in the draft communique.

This topic will be discussed on 8-9 September in the framework of the OECD steel. In addition, there is raised the question of whether the global forum, which will be a platform for dialogue and exchange of information on capacity-world potential capacity and the measures undertaken by the countries.

“Uncooperative” countries

In the statements “Twenty” is the innovation concerning the fact that the G20 decided to address the “non-cooperating jurisdictions,” said Storchak.

“As long as idea, but the idea is realized in the development of criteria by which a given economy will be assigned the status of “non-cooperating jurisdiction”, and then the chain will unwind, don’t know how far”, – he said.

In their final communique, G20 countries urged States that have not yet done so, to proceed without delay to the implementation in 2018 of the standard on automatic exchange of information, and to sign the Multilateral Convention on mutual administrative assistance in tax matters (Multilateral Convention on Mutual Administrative Assistance in Tax Matters).

“Twenty” also said he supported a proposal by the OECD to develop criteria for identifying jurisdictions that are non-cooperative on tax transparency. The G20 have asked the OECD to report by July 2017 on the progress of countries with the aim of preparing the list of jurisdictions that have not succeeded in bringing standards of tax transparency to the international level.

The list should be ready by the next summit in Hamburg in July 2017, to publish it or not, will decide just before the summit.

The communique noted that countries from this list will be accepted “protective measures” (what, is not explained).

“The criteria have already been defined. There may be some additional details, but the basic three positions clear and transparent: first, a country signs and participates in the exchange of information on request. What is now it’s must. Next, the country will be required to participate in the automatic exchange of information. That is, without requests. And third, all countries to have the status of not cooperating should join the OECD Convention on automatic exchange of information”, – said S. Storchak.

According to him, while the list of punitive measures against countries that fall into the list, no, this is the next stage.

The Paris club

This time, the financial “twenty” mentioned in the outcome document of the Paris club, which regulates the issues of sovereign debt.

“Resumed the work of the working group on financial architecture, which gave the first portion of their research. The group has five areas of work, including the questions of sovereign debt and debt sustainability. Exactly got the initiative for more active involvement of the Paris club for the discussion on the sovereign debt restructuring mechanism,” – said Storchak.

While the Paris club is mentioned in the context of joining the club of emerging markets. Until very recently, among emerging markets, only Russia was in the club a permanent member. The permanent membership issued by the Republic of Korea.

The G20 also welcomes the regular participation of China in meetings of the Paris club and its intention to accept to play a more significant role (including talks on potential membership).

“China has become the largest international lender, accordingly, the assessment of debt sustainability and solvency of any sovereign developing countries to address the requirements of China on this country is impossible. The club members are very interested in the fact that China joined the work at the club, primarily from the point of view of sharing information about their requirements,” – said Storchak.