G20 backs OECD global plan to curb tax avoidance

The Group of 20 has fully endorsed an action plan to clamp down on tax avoidance which its creators say could lead to the biggest change in the global tax system since the 1920s.

The Organisation for Economic Co-operation and Development (OECD) presented G20 finance ministers and central bank chiefs with the plan at their meeting in Moscow, aiming to stop big multinationals using theoretically legal schemes to pay as little tax as possible.

The OECD action plan has the support of the increasingly influential economies of China, Brazil and India as well as the likes of Luxembourg, the Netherlands and Ireland - all of whom have been accused of beggar-thy-neighbour tax policies.

The issue has gathered importance at a time of economic difficulty, with governments keen to use every means to rake in as much cash into depleted budgets as they can.

The OECD plan aims to create a broad super-national system of regulation that will remove the incentive for companies to use practices like registering in a third country to pay a minimum of tax and other schemes.

"We fully endorse the ambitious and comprehensive action plan submitted at the request of the G20 by the OECD," the G20 said in its statement on Saturday.