UK urges G8 to close global tax loopholes
London, June 16, 2013
Britain turned up the pressure on other rich economies to clamp down on secretive money flows at a summit next week by pressing its overseas tax havens into a transparency deal and announcing new disclosure rules for British firms.
Prime Minister David Cameron wants to make progress on closing global tax loopholes when he hosts a meeting of leaders of the Group of Eight economies in Northern Ireland tomorrow and Tuesday.
"It is important we are getting our house in order," Cameron said in a speech in London yesterday after representatives of overseas tax havens linked to Britain agreed to sign up to an international transparency protocol.
"It is a very positive step forward and it means that Britain's voice in the G8 and the campaigning on this issue around the world for proper taxes, proper companies and proper laws ... will be stronger."
Ten territories and self-governing regions will join the Multilateral Convention on Mutual Assistance in Tax Matters which has been agreed by more than 50 countries.
They also pledged to produce plans on how to provide more information on the ownership of so-called shell companies.
Those included in the agreement were Bermuda, British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.
The convention will help developing countries trying to trace money they suspect belongs in their state coffers, to request tax information from offshore centres.
Also the British government said it will introduce new domestic rules to combat tax evasion and money laundering, by forcing shadowy "shell" companies to throw off their cloak of anonymity and reveal who really runs them.
Under the new British rules, companies will be required to obtain and hold information on their ownership and control which will then be held in a central registry, available to police and revenue agencies.
Chancellor George Osborne said it was essential that British law enforcement and tax authorities had access to information about the ultimate owners of companies, and it was time for others to act.
"These commitments demonstrate concrete action we are taking ourselves but it is vital that we take collective international action through the G8 to tackle the challenges of tax evasion, money laundering and illicit finance," Osborne said.
But aid campaigners said Britain's action will count for little if the rest of the G8 - the US, Japan, Canada, Russia and Europe's biggest economies - does not follow suit.
"The acid test of the prime minister's efforts will be whether he delivers a G8 deal that clamps down on tax haven secrecy and phantom companies, and will help poor countries collect the money they need to end the scandal that sees one in eight people go to bed hungry," said Enough IF campaign spokesperson Melanie Ward.
It represents more than 200 anti-poverty campaign groups.
A consultation on the design of Britain's new rules, including whether the register of beneficial ownership should be publicly available, as sought by anti-corruption campaigners, will be published by the government in the coming months.
Global tax evasion could be costing more than $3 trillion a year, according to researchers from Tax Justice Network while as much as $32 trillion - twice the size of US gross domestic product - could be hidden by individuals in tax havens. - Reuters