The Untouchables: G-8 leaders pledge to turn up the heat on tax evasion and avoidance at their summit in Northern Ireland.
Tackling illegal tax avoidance has become increasingly important for governments as they struggle to revive their economies while paying down debt levels that exploded in the wake of the global financial crisis.
Stung by mounting evidence that major companies are shifting profits across borders, G-8 leaders said countries should change rules to prevent that from happening and multinationals should report what tax they pay and where.
"If you want a low tax economy ... you have to collect the taxes that are owed -- that is only fair for companies and people that play by the rules," U.K. Prime Minister David Cameron said at the end of a two-day summit.
U.K. and U.S. lawmakers have stepped up their scrutiny of the tax practices of big companies such as Apple (Fortune 500)and , Google (Fortune 500), concerned that wealthy businesses are taking advantage of laws that have failed to keep pace with the development of the digital economy. ,
A U.K. parliamentary committee last week called for a formal inquiry into whether Google was operating within the law by booking the vast majority of sales made in the Britain to a subsidiary in Ireland.
Company executives have insisted they play by the rules, and it's up to politicians to change them if they don't like the result. Agreement at the G-8 increases the chances of that happening.
"We will work to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world," the G-8 nations said in a statement issued at the end of a two-day summit.
The Organization of Economic Cooperation and Development and G-8 will work on ensuring that tax rules do not allow or encourage multinationals to reduce overall taxes paid by artificially shifting profits to low-tax jurisdictions, they said. The OECD is due to present a plan of action at a meeting of G-20 finance ministers next month.
The G-8 leaders also said they would share information automatically between tax authorities and push for that to become the new global standard to make it easier to clamp down on tax evaders.
Developing countries, which lose more in tax avoidance than they receive in aid, will be given access to the global information they need to collect the taxes they're owed.
Anti-poverty campaigners described the G-8 deal as an historic achievement.
"The G-8's work to curb corporate tax avoidance is awesome," said Eric LeCompte, executive director of Jubilee USA Network. "I think we would like to see even greater moves for corporate transparency, but the foundation the G-8 built will take us into a more accountable corporate world then we've seen before."
The G-8 agreed to do a better job of tracking "beneficial ownership" -- that is, who ultimately owns and profits from companies and trusts -- and to make that information available to tax collectors and law enforcement agencies.
"These are really strong commitments that have never been written down in this way, and then signed by every G-8 leader," Cameron said.
But in a sign of how difficult it is to make progress on sensitive tax matters, the Swiss government suffered a defeat Tuesday when its draft law to allow banks to share offshore account data with U.S. tax authorities was blocked in parliament.
|5 people you might not tip (but should)|
|Stocks: It's report card time on Wall Street|
|Pope Francis challenges the free market - The Buzz|
|General Mills reverses course on right to sue after backlash|
|Why you should pay off your car loan ASAP|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.36%||4.24%|
|15 yr fixed||3.39%||3.26%|
|30 yr refi||4.34%||4.22%|
|15 yr refi||3.38%||3.24%|
Today's featured rates: