Multinationals are using overseas subsidiaries to avoid paying tax - George Osborne is relaxing the rules to make the shifty manouevre easier to perform.
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Last night’s Panorama showed how giant multinationals, like Glaxo SmithKline are using overseas subsidiaries to avoid paying millions in pounds in tax.
Watch how they do it:
And instead of clamping down on it, Chancellor Osborne is relaxing the rules to make the shifty manoeuvre easier to perform. The pre-existing rules also protected the tax payable by British companies in developing countries.
As ActionAid’s Chris Jordan wrote on Left Foot Forward:
Changes to obscure sounding ‘Controlled Foreign Company (CFC) rules’ – debated in Parliament this week – could give the green light for Barclays and other large British multinationals to increase their use of tax havens like the Cayman Islands to dodge their taxes in the developing world.
Despite the rhetoric about cracking down on “morally repugnant” tax avoidance, George Osborne seems happy to turn a blind eye where poor countries are concerned; while the IMF, OECD, UN and World Bank all recommend an impact assessment – to highlight where the greatest damage will be done – so far the Treasury refuses to do so.
In evidence submitted to Parliament’s Treasury select committee last year, Barclays said the “majority” of its Cayman Islands companies were:
“…managed and controlled in the UK and are therefore subject to tax in the UK… under the UK CFC legislation.”
It is likely some of these tax haven companies that are currently covered by the CFC (anti-tax haven) rules will be exempted after the changes. ActionAid estimates developing countries could lose £4 billion a year if these changes make it onto the statue book.
• Osborne, Barclays, the Cayman Islands and tax avoidance 17 Apr 2012
• The real Mitchell tax scandal is DFID’s failure to stand up to Osborne 29 Mar 2012
• The Treasury dodges the question on its new tax loophole for multinationals 7 Mar 2012
• The Osborne tax get-out turns aid for the poorest into a subsidy for multinationals 6 Mar 2012
• Slasher Osborne accused of £1.6m tax avoidance 18 Oct 2010
The British taxpayer is losing out twice – uncollected taxes from megacorporations have to be picked up by ordinary citizens, and by taking money out of developing countries’ treasuries, they remain reliant on aid – including that from the UK.
As Graham Black of the Association of Revenue and Customs: told Panorama:
“What my members see every day is that some large businesses are managing to avoid their fair share of taxes which means everyone else has to pay more too. That doesn’t seem fair.
“[The Government’s tax changes are] rather like you legalise murder and then you say your crime rate is falling.”
51 Responses to “Osborne allows tax avoiders to get away with murder – while you pick up the tab”
Jan
Corrupt, immoral, evil, heartless, I hope the whole rotten lot of CONDEMS ROT IN HELL XX
Viv
Osborne allows tax avoiders to get away with murder – while you pick up the tab http://t.co/p8HP2czV <<< Unsurprising, but still disgraceful
Nicholas Swetenham
I believe large corporations should pay decent tax rates in the UK. However, the tricks described here are not new and not surprising – Luxembourg is an EU country with low tax rates, and since the UK joined the EU in 1973 free movement of capital has been permitted. Corporations, whose purpose is to maximise profit, do whatever they can to legally avoid taxes. What’s needed is a renegotiation of terms between EU countries if you want to close this particular loophole.
Declaration of interest: I was born in raised in Luxembourg
Adam Gedge
Osborne allows tax avoiders to get away with murder – while you pick up the tab http://t.co/p8HP2czV <<< Unsurprising, but still disgraceful
Anonymous
No, Mr. Sensible, the TORIES (or possibly the 1%) are all in it together.
The thing about the English language is that Cameron’s statement parses as correct English both ways, and it’s been clear for a long time which of those meanings he was using.