Monday 23 October 2017

G8: George Osborne hopeful of progress on tax rules

Chancellor George Osborne
Chancellor George Osborne

Britain is hopeful of achieving "real concrete progress" at the G8 summit in Northern Ireland today on tightening international tax rules which allow rich companies and individuals to avoid paying their fair share, British Chancellor George Osborne said today.

British Prime Minister David Cameron has put action on tax havens and transparency about company ownership at the heart of his agenda for the two-day meeting of leaders of eight of the world's largest economies at Lough Erne in Co Fermanagh,

And Mr Osborne made clear today that he expects the G8 countries - the UK, US, France, Germany, Italy, Canada, Japan and Russia - to make progress on the issue, after Britain secured agreement from 10 of its overseas territories and Crown dependencies, widely viewed as tax havens, to sign up to a new OECD standard on the exchange of tax information.

Mr Osborne said the UK wants to change outdated international tax rules which allow companies to locate their profits in low-tax countries and avoid paying taxes on them in the countries where they were earnt.

Big companies such as Google, Amazon and Starbucks have come under fire in recent months for operating legally within this tax system to minimise the amounts they have to pay.

Speaking from Lough Erne, where he is joining the prime ministers and presidents for today's session on tax, the Chancellor told BBC1's Breakfast: "I think we can do quite a lot and I think you are going to see some concrete steps here at this summit to change the rules about tax that have been in place for decades but, as the world has developed, haven't really kept up.

"As a result, individuals can hide the taxes they are supposed to pay in the international banking system and companies are able to shift their profits around the globe, away from where those profits are actually generated and therefore they don't pay tax.

"That's really important because that is less money for our NHS and our schools and the things we need to invest in."

Setting out his hopes for today's talks, Mr Osborne said: "We can rewrite the international rules that allow companies to shift their profits away from the UK or any other country where they are doing business.

"Obviously we have to get international agreement, and there is no better place to start than when you have got eight of the largest economies in the world sitting round the table. I think we will see real concrete progress on that today."

A key feature of the proposals on the table at Lough Erne is support for a new regime of exchange of tax information, so that countries will be able to know details of offshore accounts held by companies or individuals overseas.

Britain is planning to take part in a pilot scheme later this year to trial the new rules ahead of the introduction of new OECD standards, and wants to sign up other countries.

Mr Cameron also wants greater transparency about so-called "beneficial ownership" to make clear who is the ultimate owner of a company and make it more difficult to operate "shell companies" which often carry out no business activity, but exist only to hide the true source of income from tax authorities.

"We are insisting that there is an automatic transfer of information between countries and that will mean that we can find out what is happening in other jurisdictions," said the Chancellor.

Britain has often been seen as an international black sheep on tax havens, thanks to the practices in its overseas territories and crown dependencies like Bermuda, the Cayman Islands, Jersey, Guernsey and the Isle of Man. But Mr Osborne said their agreement in London on Saturday to accept the new OECD code showed the UK was "putting our house in order".

"All of these jurisdictions have actually now signed up, thanks to our pressure and discussions with them, to the automatic transfer of information," he said.

And he added: "We are crucially making progress on beneficial ownership - in other words, companies knowing who owns them.

"This is all technical stuff, but it is important because it is the wiring of the tax system and by putting our own house in order I think we can also try to achieve more broad international agreement."

Anti-poverty campaigners have welcomed Mr Cameron's decision to focus the G8 agenda during Britain's year-long presidency on tax transparency, arguing that it is the poorest countries in the world which lose out most from individuals and companies secreting their wealth in offshore boltholes.

However, Adrian Lovett, Europe executive director at development campaign group One, warned that any agreement on the exchange of tax information must include the developing world, and not just the rich nations of the G8.

And he called for public registries of tax information, to allow investigations not only by tax authorities but also by campaign groups and the media.

"The G8 must also ensure that the system they put in place for sharing tax information involves developing countries from the start," said Mr Lovett.

"By taking these steps, the G8 will not only put its own house in order, but do so in ways that help the fight against extreme poverty. The UK must continue to lead the way and lobby its G8 partners, with no let-up in pace or ambition. G8 leaders must decide whether they want to shape the transparency revolution or resist the tide of history."

Mr Cameron was also hoping for a show of unity over the civil war in Syria, which has largely overshadowed the economic priorities of the summit.

Over dinner last night, Western leaders faced down Russian President Vladimir Putin over his support for the regime of dictator Bashar Assad.

Downing Street welcomed a "very positive" response from the Russian leader, reviving hopes for a peace conference to pave the way for a political transition in the war-torn Middle Eastern state.

While nobody at the summit was in any doubt about the continuing differences between Moscow and the West, sources suggested Mr Putin was ready to sign up to five key principles discussed at last night's dinner.

As they dined on local Northern Irish fare, Mr Cameron asked fellow leaders - Mr Putin, Barack Obama, German Chancellor Angela Merkel, French President Francois Hollande, Italian PM Enrico Letta and Japan's Shinzo Abe - to consider whether the G8 can come together behind a consistent view on:

Demanding access for humanitarian aid to reach Syria's people;

Taking on extremists on all sides of the conflict;

Condemning the use of chemical weapons as unacceptable;

Exploring whether the G8 could play a role in stabilising Syria after any change in regime;

Supporting a political transition to a new government executive authority in Damascus which can command the consent of the Syrian people.

The PM is understood to want a clear statement of intent in the final summit communique this afternoon.

 

Press Association

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