Tougher Rules for Tax Havens Called for by Brazil

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Officials in Brazil are expected to push for greater efforts to combat those companies and individuals that use international loopholes to pay lower or no taxes at all during the meeting of the G20 group, scheduled for next week in Hangzhou, China.

Brazilian officials will join several non-governmental agencies in asking world leaders to look closer at this problem. “We ask the world leaders to work together to create a global tax system that works in favor of the majority and not the minority,” says the proposal from Oxfam which plans to hand G20 a petition to more closely monitor these fiscal havens.

In June 2016, Brazil ratified the OECD accord signed in 2014, where it agrees to automatically inform the group of countries on foreign movements in the country and, in return, receive data on financial assets that Brazilians possess in foreign countries. Brazil is not part of the OECD, but has partnership agreements with the organization, which is composed of 34 countries.

In addition to the agreement with the OECD, which will start to be implemented in 2018, Brazil also has an accord with the United States through its Foreign Accounts Tax Compliance Act (FATCA). The agreement monitors taxpayers from the two countries with at least US$50,000 in the other country.

“Countries lose at least US$170 billion every year, because rich individuals and multinational companies hide vast amounts of money in tax havens,” says a recent report by Oxfam.

Brazil’s Finance Minister, Henrique Meirelles, is expected to be joined by President Michel Temer in China. This will be Temer’s first official visit abroad as President if suspended President Dilma Rousseff is permanently removed from office this week.