UK: The G8 Summit

The G8 Summit on 17-18 June 2013 at Lough Erne focused on three areas of particular interest to business:

  • The increased accessibility and exchange of information as a mechanism to tackle perceived tax evasion, and specifically the development of a multilateral model of automatic exchange of information and improved transparency around the beneficial ownership of companies
  • The G8 highlights the need for tax authorities to obtain comprehensive and relevant information on multinationals in order to identify tax risks. In particular, the G8 notes that a standard template for multinationals to report to tax authorities in respect of the global allocation of profits and taxes paid would be of great benefit
  • Support for developing countries through commitments to open trade, fair taxation and increased transparency, as well as keeping aid promises and being accountable to the public for them

Automatic Exchange of Information

The G8 announcement builds on a number of key developments over the past twelve months regarding the automatic exchange of information between countries. Much of this has been driven by the implementation of the US Foreign Account Tax Compliance Act (FATCA), which has subsequently enjoyed widespread international support, and imposes a number of compliance obligations on financial institutions globally.

Against this backdrop, the G8 has sought to go even further in relation to automatic exchange of information. The Lough Erne Communiqué states that the G8: "commit to establish the automatic exchange of information between tax authorities as the new global standard, and will work with the Organization for Economic Cooperation and Development (OECD) to develop rapidly a multilateral model which will make it easier for governments to find and punish tax evaders."

Specifically, the Communiqué commits to working towards the recommendations set out in the OECD's report on tax transparency ( developed for the G8 summit. This report outlines the practical requirements for developing automatic information exchange systems, and provides recommendations on the breadth of information, income and institutions to be covered. Nevertheless, there remain some significant challenges for governments to introduce such a system, including agreeing a common reporting schema, appropriate confidentially of information and the legal basis for the exchange.

Beneficial ownership of companies

There have also been some moves to increase the transparency of beneficial ownership of companies. The UK Government supports the idea of greater clarity on the ownership of companies (and trusts) and made its own announcement prior to the summit. It was therefore understood that one of the UK Government's aims at the G8 was to discuss the possibility of central registries of the beneficial ownership of entities.

As a result of discussions, the Lough Erne Declaration states that the G8 will apply the principle that "companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily". This sentiment is supported by a G8 action plan of principles to prevent the misuse of companies and legal arrangements.

The UK Government has released its own action plan for implementing this, which provides some detail. In particular it commits to making amendments to the Companies Act 2006 that will oblige companies to obtain and hold accurate information on their beneficial ownership. Such information is also to be made available to the authorities through Companies House and a consultation will be held on whether it should be publicly accessible (an area of considerable debate). The UK will release a consultation document later in 2013.

In addition, there are provisions included in relation to information held on trusts and a review of the supervision and enforcement of trust and corporate service providers in the UK. The use of bearer shares and nominee directors will also be the subject of a review by the Department of Business, Innovation and Skills.

Although for the majority of these actions there is not a clear timetable for implementation, it is clear that the direction of travel is towards more transparency in respect of the beneficial ownership of both companies and trusts. It currently looks unlikely that this information will be available publicly, since other G8 countries have indicated that they do not wish to publish.

Company taxation and reporting

The G8 welcomes the OECD's work to tackle base erosion and profit shifting (BEPS), and agrees on the importance of working together in respect of international taxation. The G8's objective is to ensure that international and domestic tax legislation does not allow, or encourage, reduction of taxes by multinational enterprises by the artificial shifting of profits to low-tax jurisdictions.

The G8 calls upon the OECD, as part of its wider BEPS work, to develop a common template for country-by-country reporting to tax authorities. It was clear that the G8 did not support mandatory public reporting by multinationals.

The remit for the template's design fits well with other work currently being undertaken by the OECD, including the draft handbook on transfer pricing risk assessment, the transfer pricing simplification project and the BEPS work itself. The G8 does not specify details of the high level profit and tax information to be included in the common template.

Tax authorities need relevant and focussed information in a brief format to allow them to assess transfer pricing risks. Traditional transfer pricing documentation does not always satisfy this need, due in part to its length, but also its focus on transactions and local entities rather than the overall group perspective. A common format designed by the OECD is a welcome approach – the alternative under which different countries or groups of countries introduce their own formats would be an unappealing new compliance burden for business (those struggling with the variation in transfer pricing documentation requirements, even within the EU, will attest that additional compliance costs do not always correspond with additional benefit for tax authorities). It is also clear that there will need to be safeguards over the use of the information, to protect confidentiality and prevent misuse. These safeguards will no doubt be part of the OECD's work.

Developing countries

The G8 governments reconfirmed at the Lough Erne summit their commitment to support developing countries by staying committed to open trade, fair taxation and increased transparency, as well as keeping the aid promises and being accountable to the public for them.

Open trade

The G8 supports the central role of the WTO in bringing down the barriers to trade that currently inhibit global growth and prevent a level playing field in global trade. Opening new export opportunities for developing countries would boost their jobs and growth, and better border procedures will improve their customs and tax collection. The G8 reiterates the need for increased transparency in reporting aid provided to developing countries.

Africa is the next emerging continent with a growing share of the world's trade. Increased trade, however, is predicated on increased investments in infrastructure. The G8 commits to explore and identify further steps it can take to facilitate institutional investment flows into trade-related infrastructure projects in Africa and other developing countries.

Fair taxation and transparency

The G8 reconfirms their commitment to provide practical support to developing countries' efforts to build capacity to collect the taxes and to engage in and benefit from changing global standards on exchange of information. They declare that developing countries should have the information and capacity to collect the taxes owed them and the other countries have a duty to help them.

The G8 is committed to take action on to raise global standards on extractives transparency and accountability. The G8 supports also greater transparency in land transactions and increased capacity to develop good land governance systems in developing countries.


The G8 committed to hold themselves to account for their promises to deliver the development commitments, 56 of which were assessed in the comprehensive Lough Erne Accountability Report 2013. The Report shows good progress in some areas but it also identifies that more action is required to deliver on our promises in some areas, such as aid and aid effectiveness, remittances and protecting biodiversity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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