Business World

Wednesday 27 August 2014

Osborne joins the concerted attack on our corporate taxes

Thomas Molloy

Published 06/12/2012 | 05:00

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THE concerted attack on Ireland's corporate tax regime has widened and deepened as UK Chancellor George Osborne promised voters that he will clamp down on multinationals from avoiding taxes in Britain and boost spending on fighting tax avoidance.

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Mr Osborne told the British parliament in his autumn economic statement that Britain is joining forces with France, Germany and the Organisation for Economic Cooperation and Development to ensure "multinationals pay their fair share".

The clampdown on corporate tax avoidance schemes will form an important part of the UK's presidency of the Group of Eight industrialised nations next year, Mr Osborne added.

UK Prime Minister David Cameron also took aim at multi-nationals, telling the House of Commons that some companies had "very strange" ideas about transfer pricing – a controversial practice that is legal but largely unpoliced.

Tax avoidance has become a big issue as European voters tighten their belts. The UK's Inland Revenue will be the only government department not to suffer spending cuts next year and will be given £77m (€95m) to take on an extra 2,500 inspectors. The Inland Revenue's plans to buy more technology may yield £2bn in unpaid tax.

Mr Osborne's promise to tackle multinationals comes as the European Commission prepares to bring forward proposals aimed at clamping down on corporate tax avoidance schemes.

Reports from Brussels say the European Commission proposals will include an EU-wide "black list" of tax havens and an action plan aimed at tackling tax evasion and avoidance. The commission says such activities deprive member states of almost €1 trillion every year.

Europe is also taking aim at the practice of profit-shifting and "transfer pricing", which allows companies to legally move income earned in one country to another jurisdiction to lower their total tax bill.

Transfer pricing is popular with companies such as Google, Apple, Microsoft and Facebook which have international headquarters in Ireland. TASC, a small trade union-funded thinktank, said that Ireland is a haven for tax-dodging companies.

Autumn statement Page 2

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