G8 summit: Cameron hails declaration on tax
As world leaders at the G8 summit sign up to a plan to combat tax evasion and money laundering, David Cameron tells Channel 4 News it is a “big step forward”.
Tax transparency has been at the top of the British government’s agenda at the G8 summit in Northern Ireland, and agreement has now been reached on a declaration that is designed to combat practices that make it difficult to work out who owns a company and how much firms should pay in tax.
The Lough Erne declaration commits the G8 countries to the automatic sharing of tax information “to fight the scourge of tax evasion”.
Multinational companies will have to report to tax authorities what tax they pay where, and tax collectors will be able to obtain information about the ultimate ownership of a company. Developed countries should ensure that developing countries are given help to collect taxes.
The British government has published its own action plan requiring companies to provide details of their owners to a central registry. There is no guarantee the public will be able to access this information, but Chancellor George Osborne said he was “open” to the idea.
At a G8 level, countries will decide for themselves if they want to set up similar registers.
‘Worth a huge amount’
Asked by Channel 4 News if anything short of a publicly-available register was not worth the paper it was written on, the prime minister said: “No, it is worth a huge amount.
“One of the first steps you need is to have a proper register of beneficial ownership that’s available to the tax autjhorities.
“It would be their first port of call to find out who owns what and to check up on tax evasion, tax avoidance and also to prevent corruption leaching out of developing world countries where contracts might have been illegally paid for. So these are big, big steps forward.
“Would you like to go further, is there more to do? Of course there is, but I think the Lough Erne declaration on tax, on transparency and on trade – very, simply set out, saying we should know who owns what company, what they pay, where they pay it – is a real step forward.”
‘Too weak’
Tax campaigner Richard Murphy, director of Tax Research UK, told Channel 4 News progress had been made, “but it’s far too weak and is not going to be properly policed”, adding: “The importance of the summit is it brings the issue of tax and tax evasion on to the international agenda, an agreement that this is something that needs to be addressed.”
Mr Murphy said the requirement for multinationals to report to different tax authorities was “innovative and new”, while the provisions on the real ownership of companies would “help identify who the tax avoiders are”.
G8 summit: questions to Cameron in the whistling wind. Read Gary Gibbon's blog.
The declaration falls short of the demands of anti-poverty campaigners, who want the developing world included in the new arrangements from the start and have called for tax information to be made available to all on public registers.
The talks had been overshadowed by disagreement on proposals to arm the rebels in Syria.
The British government wants to change international tax rules which allow companies to locate their profits in low-tax countries and avoid paying taxes on them in the countries where they were earned.
Companies such as Google, Amazon and Starbucks have been criticised for operating legally within this tax system to minimise the amount they have to pay.
Overseas territories
Britain has been criticised because of the practices of its overseas territories and crown dependencies, like Bermuda, the Cayman Islands, Jersey, Guernsey and the Isle of Man.
But Chancellor George Osborne said these territories had agreed in London on Saturday to accept a new OECD code, which showed Britain was “putting our house in order”.