G20: UHNWIs in the spotlight

Since the 2008 financial crisis the G20 has become a political organistion with an overt agenda. This can be seen in the slug line to G20 Brazil 2024: “Building a just world and a sustainable planet”.

The July 2024 Ministerial Declaration on International Tax Cooperation firmly places UHNWIs in the tax spotlight.

“…Aggressive tax avoidance or tax evasion of ultrahigh-net-worth individuals can undermine the fairness of tax systems, which comes along with a reduced effectiveness of progressive taxation. No one should be able to evade taxation, including by circumventing transparency standards….”

For me a key question is: what exactly do the G20 ministers mean by aggressive tax avoidance and evasion?

The answer may be found in the IMF’s “G20 Note on Alternative Options for Revenue Mobilization”:

“…Wealth and, to a lesser extent, its owners are internationally mobile. To prevent the simplest form of avoidance by investing wealth elsewhere, most countries tax residents on their worldwide capital income or wealth. However, undeclared foreign assets are difficult to monitor and therefore prone to evasion risk…”

The note goes on to ponder minimum wealth taxes and financial transaction taxes as a solution to taxing the superrich. Whilst the IMF deems FTTs to be inefficient, it does not discount a minimum wealth tax as a solution, despite the likely tax revenues to be low. Instead the solution, for the time being is:

“…International administrative cooperation in the form of exchange of information is important to address tax evasion and could be expanded further to cover exempt categories (notably real estate)…”

This is echoed by the G20 declaration:

“…Exchanging foreseeably relevant information regarding crypto-assets and real estate for tax purposes, including beneficial ownership information where it is foreseeably relevant, is a challenging task which requires enhanced international tax cooperation…”

So, what can we expect? In simple terms it looks like the automatic exchange of information in relation to crypto and real estate.