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MPs condemn 'sticking plaster' response to corporate tax avoidance MPs condemn 'sticking plaster' response to corporate tax avoidance
(21 days later)
An unprecedented international effort to stop some of the world’s largest multinational corporations – including Google, Amazon and Starbucks – avoid tax has offered only a “sticking plaster” solution that will not hold, according to a report published by a cross-party parliamentary group.An unprecedented international effort to stop some of the world’s largest multinational corporations – including Google, Amazon and Starbucks – avoid tax has offered only a “sticking plaster” solution that will not hold, according to a report published by a cross-party parliamentary group.
After taking evidence from a range of experts, the all-party tax responsibility group, made up of British MPs and peers, found that G20 nations and others were still falling short in the battle against aggressive tax planning by big businesses.After taking evidence from a range of experts, the all-party tax responsibility group, made up of British MPs and peers, found that G20 nations and others were still falling short in the battle against aggressive tax planning by big businesses.
Related: European commission announces crackdown on corporate tax loopholes
The report, published on Thursday, paid tribute to tax experts from the Organisation for Economic Cooperation and Development (OECD), who spent two years working on reforms, published last year, that were supported by more than 60 countries, representing 90% of the world economy.The report, published on Thursday, paid tribute to tax experts from the Organisation for Economic Cooperation and Development (OECD), who spent two years working on reforms, published last year, that were supported by more than 60 countries, representing 90% of the world economy.
However, parliamentarians have now called for further, more radical, reforms, particularly in the face of new tax structures available to internet groups. “These proposals are a ‘sticking plaster’ on a global tax system that is struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment,” the report said.However, parliamentarians have now called for further, more radical, reforms, particularly in the face of new tax structures available to internet groups. “These proposals are a ‘sticking plaster’ on a global tax system that is struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment,” the report said.
Their concern was echoed by leading international poverty charities. Oxfam said: “Today’s report is a welcome admission by MPs that the world has so far failed to tackle tax dodging.”Their concern was echoed by leading international poverty charities. Oxfam said: “Today’s report is a welcome admission by MPs that the world has so far failed to tackle tax dodging.”
A spokesperson for Christian Aid said: “Every tax scandal leads to promises of a crackdown, but the last government rarely matched words with action ... Theresa May’s government must prove it takes this issue seriously by adopting the proposals in today’s report in full.”A spokesperson for Christian Aid said: “Every tax scandal leads to promises of a crackdown, but the last government rarely matched words with action ... Theresa May’s government must prove it takes this issue seriously by adopting the proposals in today’s report in full.”
The parliamentarians’ report describes the UK as having been a “difficult friend” to efforts to reform global taxation. Margaret Hodge, who chairs the all-party group, said: “The government has been facing both ways. While publicly proclaiming their determination to tackle global tax avoidance, they have been encouraging these practices by changes they have made to the UK tax system and by refusing privately to agree to some key OECD proposals.”The parliamentarians’ report describes the UK as having been a “difficult friend” to efforts to reform global taxation. Margaret Hodge, who chairs the all-party group, said: “The government has been facing both ways. While publicly proclaiming their determination to tackle global tax avoidance, they have been encouraging these practices by changes they have made to the UK tax system and by refusing privately to agree to some key OECD proposals.”
Related: Can Theresa May get the wheels of British business turning again?
There are concerns among some international tax reformers that Britain’s exit from the European Union may see it take an even more aggressive approach to tax competition. In a leaked memo, revealed by Reuters, OECD head of tax Pascal Saint-Amans, wrote: “The negative impact of the Brexit on UK competitiveness may push the UK to be even more aggressive in its tax offer ... A further step in that direction would really turn the UK into a tax haven type of economy.”There are concerns among some international tax reformers that Britain’s exit from the European Union may see it take an even more aggressive approach to tax competition. In a leaked memo, revealed by Reuters, OECD head of tax Pascal Saint-Amans, wrote: “The negative impact of the Brexit on UK competitiveness may push the UK to be even more aggressive in its tax offer ... A further step in that direction would really turn the UK into a tax haven type of economy.”
Before he was replaced as chancellor, George Osborne said he thought the UK should “get on with it” and prepare for its new position outside the EU by slashing corporation tax to less than 15% – markedly below all other major world economies.Before he was replaced as chancellor, George Osborne said he thought the UK should “get on with it” and prepare for its new position outside the EU by slashing corporation tax to less than 15% – markedly below all other major world economies.
Business lobbyists, and some politicians, have suggested the tax is so open to abuse by multinationals that it is becoming increasingly untenable.Business lobbyists, and some politicians, have suggested the tax is so open to abuse by multinationals that it is becoming increasingly untenable.
Last October, the OECD released what it called “extremely conservative” estimates suggesting large global businesses were shifting profits and eroding the tax receipts of economies around the world at a cost of $100bn-$240bn (£65bn-£160bn) a year – equivalent to between 4% and 10% of global corporation tax revenues.Last October, the OECD released what it called “extremely conservative” estimates suggesting large global businesses were shifting profits and eroding the tax receipts of economies around the world at a cost of $100bn-$240bn (£65bn-£160bn) a year – equivalent to between 4% and 10% of global corporation tax revenues.