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G20 countries call tax policy overhaul

dpadpa 23/07/2016

The US, OECD and IMF have all called for reform to tax policy around the world to promote socially balanced, sustainable economic growth.

Group of 20 finance ministers say taxation policies should be improved worldwide to reflect globalisation and promote socially balanced, sustainable economic growth.

US Treasury Secretary Jack Lew said that not only specific tax rules but entire "taxation administrations (based on national boundaries) have to be updated."

"Changing business models have a serious impact," Lew said on Saturday, pointing to cross border trade and current opportunities for tax avoidance.

"We need to make sure that we determine clearly where value adding is taking place."

The Secretary-General of the Organisation for Economic Co-operation and Development, Angel Gurria, called for a socially equitable tax system.

"We must consider the impact of taxes on the welfare of the people ... Stronger global trade should not lead to more inequality," Gurria said.

International Monetary Fund chief Christine Lagarde said she agreed tax policy should be part of reforms led by G20 members, while raising concerns that "sluggish growth which is under threat from other political events."

Lew, Gurria and Lagarde were speaking at a meeting of G20 finance ministers and central bank governors in Chengdu, capital city of southwestern China's Sichuan province.

The world economy is at a "critical juncture" where the impact of the financial crisis is still unfolding, said Chinese finance minister Lou Jiwei, who also called on the G20 to play a leading role in supporting a new international tax system.

It was the first time Beijing publicly called for reforms in international tax, according to the official Xinhua news agency.

China will host the 2016 G20 summit in the eastern city of Hangzhou from September 4-5, which will be themed, "Building an innovative, invigorated, interconnected and inclusive world economy."

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