Germany, U.K. propose common front against e-commerce tax evasion

Nov 05, 2012, 2:23 PM EST

MEXICO CITY (AP) — Germany and the United Kingdom proposed to the G-20 meeting in Mexico City Monday that the world's biggest economies form a common front to fight tax evasion related to internet commerce and other revenue-shifting schemes, and say they received strong support.

"We've just been discussing it in the meeting we had. There was widespread support," U.K. Treasury chief George Osborne told reporters.

Osborne and German Finance Minister Wolfgang Schauble said they don't want to scare businesses away, but said companies must pay what they owe.

"International tax standards have had difficulty keeping up with changes in global business practices, such as the development of e-commerce," the two said in a joint statement. "As a result, some multinational businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated."

They said a united approach among the world's largest economy is the best way to fight evasion, without penalizing any single country.

"It's very important that we as individual countries don't price ourselves out of the world economy," Osborne said.

They did not mention what specific accounting procedures might be targeted or what enforcement measures were proposed, but Osborne said the goal was "acting together as the world's largest economies to make sure that international tax standards keep pace with international business."

They said the proposal had been forwarded to the Organization for Economic Cooperation and Development for study, and that team would report back to the G-20 finance ministers' next meeting in Moscow in February. Both ministers said they also support the OECD's own 'tax-base erosion and profit-shifting' initiative, focused on the same problem.

Osborne stressed that "what we are doing today is starting a process," and Schauble said "I am hopeful that we will get a lot of support."