11th September 2017
It would be fair to say that anti-tax evasion legislation has increased significantly in recent years and the market as a whole has become significantly tougher to navigate. Not only has the Common Reporting Standard been put in place by the Organisation for Economic Co-Operation and Development (OECD), but the Criminal Finances Act has also come into power in the UK this month. And, just last week, a major new piece of legislation was created at a summit which could make the market even more challenging than it currently is. But what does this new agreement mean and how could it impact tax in the BRICS nations?
BRICS tax agreement
The BRICS acronym was coined by former Goldman Sachs economist, Jim O’Neill to describe the group of five rapidly emerging economies he expected to grow at the quickest rate; Brazil, Russia, India, China and South Africa. At a recent plenary session in China, representatives from this group committed to the Xiamen Declaration which creates additional legislation designed to cut the revenue lost through tax avoidance and evasion in these countries’ territories.
The declaration is designed to aid the member nations to work towards promoting a more equitable, pro-growth and efficient international tax environment, deepening cooperation to address Base Erosion and Profit Shifting (BEPS), promoting exchange of tax information and improving capacity-building in developing countries. According to a statement made at the meeting, “We will strengthen BRICS tax cooperation to increase BRICS contribution to setting international tax rules and provide, according to each country’s priorities, effective and sustainable technical assistance to other developing countries […] We will enhance communication and coordination in improving global economic governance to foster a more just and equitable international economic order.”
Legislative frenzy
As mentioned, this is far from the first piece of potentially game-changing legislation to enter the global tax arena and it’s unlikely to be the last. Governments around the world are upping their defences against those breaking the financial law and it’s almost guaranteed that more countries will partner together to add to the tough, new environment in which we’re now operating. Many recruitment agencies conduct a significant amount of business with firms based in the BRICS nations and they will now have to ensure that they’re onside with this new legislation.
Essentially, the net has got even tighter around the global employment market and those firms or individuals that think they can cheat the system and get away with tax evasion are sadly mistaken. And for organisations that are intent on remaining onside with the law, the arena has also become considerably tougher and they will now have to put in more work to steer clear of the significant punishments and penalties on offer. If you’re unsure about your status or want to guarantee your legal status in this challenging new world then partner with the experts before it’s too late.