(Photo : Shanghai Pudong New Are as an Economy and Finance Center in China)

China has finally signed the multilateral tax agreement that aims to combat tax evasion and avoidance on a global level, becoming the last member of the Group of 20 (G-20) to join the convention.

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The agreement, also known as the Convention on Mutual Administrative Assistance in Tax Matters, is the first multilateral tax deal that China has signed. The agreement calls for participating countries to share tax and financial information in order to combat tax evasion.

Timely Participation

According to the director of the State Administration of Taxation, Wang Jun, China's signing of the agreement is very timely because the country is experience major economic and structural reforms. He said the agreement also improves China's tax cooperation with the international community.

Under the agreement, China and other member countries will be able to gain access to significant tax information from other countries that will allow it to conduct tax examination. Member countries are also committed to assist in tax collection.

The agreement has been signed by 56 countries that are members of the G-20, with China as the last country to sign.

According to tax experts, the battle against offshore tax evasion is no longer bilaterial, or between just two countries, but is already a multilateral task.

Wang Jun stated that joining the global tax agreement reflects China's commitment to further integrate and open up its taxation system to the global community.

Beneficial For China

Erik Stroeve of global audit and accounting firm Mazars, said China will benefit from the agreement because it will now allow Chinese tax authorities to collect taxes that were previously inaccessible.

China's international tax agreement will also force international companies in the country to be more serious about their tax structures because it will be difficult for them to avoid taxes.

Foreign tax authorities will also be able to go after their multinational companies operating in China that have not been serious with their tax obligations back in their home countries.