Photograph by Alan Cleaver
Leaders at the G8 have agreed new measures to address international money laundering and corporate tax evasion.
The governments of the top eight industrialised economies have agreed to automatically share information on their residents’ tax affairs with each other, and will also require shell companies to identify their effective owners. The leaders hope that these measures will help to fight both illegal tax evasion and to expose the loopholes being used by multinational corporations that manage to legally avoid taxes in the countries in which they do business.
Shell companies based in tax havens such as the Cayman islands have long protected the identities of their owners from the prying eyes of tax inspectors, but this will now change. Leaders have agreed that multinationals should tell all tax authorities about how much tax they are paying and where around the globe – attempting the remove the veil of secrecy that allows many companies such as Apple, Amazon, and Starbucks to pay a much reduced rate by funnelling profits around the world. The G8 communique said:
“Countries should change rules that let companies shift their profits across borders to avoid taxes”
The G8 member countries also urged other countries to join the fight against “the scourge of tax evasion”, with both UK Chancellor George Osborne and the White House in the US unveiling similar plans for a definitive register of companies and their owners. This follows last week’s announcement that British overseas territories and crown dependencies such as the Channel islands and Gibraltar, will start sharing information on foreign companies which bank their profits there. These locations are considered to be popular destinations for those looking to hide their profits.
Mining companies were also targeted in the discussions, with recent findings showing how they have been avoiding paying tax in the developing countries where they mine minerals by using complex accounting methods and ownership structures and funnelling money through Switzerland and the Netherlands. The G8 communique demanded greater transparency from mining firms to address these issues and give developing countries rich in minerals their fair share.
Tax, trade, and transparency, “The Three Ts” are central to the UK’s agenda in the discussions for its presidency and the summit in Northern Ireland. However, much of this discussion has been overshadowed with the conflict in Syria in which Russia has been supplying arms to the Assad regime, whilst the US has announced they will supply arms to the rebels.
