May 12, 2013, 12.29 PM IST
The Group of Seven industrialised nations today agreed that collective action was needed to target tax evasion and avoidance, including by multinational companies using transfer pricing rules to shift profits into tax havens.
Speaking after a two-day meeting at Aylesbury in Buckinghamshire, south-east England, UK chancellor George Osborne said it was "incredibly important" that firms and individuals paid the tax they owed .
Besides the UK, which currently holds the presidency, the G7 comprises of the US, Germany, Japan, Italy, France and Canada.
In a news conference held jointly with Bank of England governor Sir Mervyn King, Osborne added that the countries had also agreed it was important to ensure that no bank was "too big to fail".
"We must put regimes in place to deal with failing banks and to protect taxpayers and to do so in a globally-consistent manner," he said.
The issue of tax avoidance had been raised by Britain, Germany and other big countries earlier this year.
They asked the Organisation for Economic Co-operation and Development ( OECD) - which advises rich nations on tax policy - to examine possible changes to address the problem of multinational companies using transfer pricing rules to shift profits into tax havens.
Britain wants all EU countries to sign up to a pilot scheme where tax authorities share information with each other, including low tax countries such as Luxembourg and Austria.
Germany, France, Spain, Italy, the UK and US are currently signed up to the scheme.
Luxembourg has said it will join too, but Austria has yet to confirm if it will take part.
According to the BBC, the chancellor said the discussions had "reaffirmed that there are still many challenges to securing sustainable global recovery, and we can't take it for granted".
There had been talk ahead of the meeting that Japan would be criticised for a massive stimulus plan that had pushed down the value of its currency yen.
But Japan was not censured during the talks, despite some countries being concerned that Tokyo is engineering an export-led recovery that could hinder other regions' ability to grow.
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