George Osborne urges multinational tax crackdown


George Osborne says tax laws have not kept up with changes in the world economy

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Chancellor George Osborne has renewed his call for international action to tackle so-called "profit shifting" by multinational companies to avoid tax.

Mr Osborne is meeting other finance ministers of the G20 group of major economies in Moscow.

The UK, Germany and France want to reform rules which let firms switch profits and costs between countries.

Labour's Ed Miliband said he "didn't see much evidence" Mr Osborne was actually tackling the problem.

Several well-known firms have been criticised over the amount of tax they pay on large UK revenues.

The BBC's Hugh Pym says the issue is "high on the list of priorities for policymakers at a time when companies like Amazon, Starbucks and Google have come under fire over the size of their tax payments".

The emergence of details regarding tax-avoidance strategies by multinational firms has sparked controversy, and calls for an overhaul of tax laws will be highlighted to finance ministers by the Organisation for Economic Co-operation and Development (OECD), in a report published this week.

The tax policies of Amazon, Google and Starbucks have intensified the debate about corporate behaviour and pushed it high up the agenda for policymakers.

Everyone agrees there is a limit to what national governments can do to close loopholes in a world of globalised capital flows where big companies can easily move profits to low tax regimes.

Today's G20 developments mark a move towards an international crackdown.

George Osborne and his French and German counterparts will be powerful advocates for change at future meetings.

But it is only a start. And, as the chancellor has acknowledged, in a low growth climate governments need to take care not to deter multinationals who might invest in their economies.

The chancellor told BBC News: "We want a tax system that makes it competitive for businesses to set up in Britain and create jobs, but we also want a tax system where business pay their taxes and that's what we're setting up achieving here with other countries at this meeting in Moscow.

"International companies are an important source of jobs - we want them in Britain. We are making sure the taxes in Britain are low but we do expect those international companies to pay those taxes.

"The international tax laws for these companies have not really changed in decades, even though the international economy has changed a lot - people shop online, for example - and so the only way to deal with that is to work with other countries to make sure the international tax laws change and then international companies will pay their fair share of taxes."

But Labour leader Ed Miliband said: "George Osborne makes lots of promises on tackling tax avoidance, but I don't see much evidence of it.

"What he should be worrying about is the living standards of people in this country.

"Of course, he should be dealing with tax avoidance, but one of the things he's doing is cutting taxes for the richest people in society - £100,000 tax cut for the richest people in Britain - the wrong thing to do at a time when everyone else's living standards are squeezed."

International standards plea

The UK will chair a committee set up by the OECD looking at "transfer pricing" - how global firms calculate the payments passed between their subsidiaries in different countries - which can be used to shift profits from high-tax jurisdictions to lower-tax ones.

The committee is one of three looking at the tax issues which will help the OECD prepare a "plan of action" to be put forward to the G20 in July.

John O'Connell, from the Taxpayers' Alliance, says that the UK tax system is "hideously complex"

Germany will head a panel looking at the ways in which companies have reduced their tax base - their taxable income and assets - while France and the US will jointly consider the problem of identifying the correct tax jurisdiction for business activities, particularly e-commerce.

Mr Osborne said Britain had cut its corporation tax rate by more than any other country in the G20 over the past two years, which he said was "a message to the world that we are open for business that has seen companies return to Britain, and helping to create and secure thousands of jobs and millions in investment".

He said: "Our commitment to the most competitive corporate tax system goes hand in hand with our call for strong international standards to make sure that global companies, like anyone else, pay the taxes they owe.

"That's why Britain, with Germany and France, asked the OECD to scrutinise the international rules, and we will together welcome their report to the G20 this weekend. The report shows this is an international issue that requires international action."

The chancellor said global tax rules "have stood still for almost a century", adding that "Britain will lead the international effort to bring them into the 21st Century".

He wants to use Britain's presidency of the G8 in 2013 to push international progress on the reform of international tax rules, which were first developed by the League of Nations in the mid-1920s and remain essentially unchanged.


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  • rate this

    Comment number 35.

    Oh we go again, it's the clash of the dinosaurs. When will the govt admit that Corporation Tax does not work? Companies technically pay tax as it is: their employees pay tax and NI, and there is VAT on sales of their products and services. What exactly is profit? Any money left over gets paid into bonuses or spent on R&D. I'm surprised that "profits" even exist.

  • rate this

    Comment number 34.

    Everyone would like to see Amazon etc paying more tax, and yet when Mr Osbourne puts forward an idea to do this most of the comments are either cynical or opposed!

    I welcome any ideas that get these multinationals paying their fair share.

  • rate this

    Comment number 33.

    @Sandy Notman - you're kidding, right? "Clever lad"?
    I don't think Osborne's EVER been called that before.

    Guess the Tory boys & banker-lovers are out in full force.

    All this is, is govt delaying 'let's widen the debate'. 'Let's talk about it some more'. Then before you know it, there'll be a nice Election to distract the Plebs.

  • rate this

    Comment number 32.

    The problem is we’ve sold off so many of our once owned British Industry to foreign companies we’ve lost a lot of control over them.

    They just concerned with using the UK consumer as a source of revenue to fund their profits.

  • rate this

    Comment number 31.

    Apparently it is not blatantly obvious to previous and current governments that moving manufacturing abroad reduces corporation tax income. The only way to recoup this money is to increase sales tax, and the downward spiral continues. Add to this the reduction in PAYE, NI and supporting millions unemployed it can only be a lose situation for the country,

  • rate this

    Comment number 30.

    Perhaps these mulinationals could be told to pay there taxes or get the hell out of the UK. But that would require real leadership and no current party in the UK has that with the possible exception of UKIP.

  • rate this

    Comment number 29.

    If tax rates were reasonable, more people would be inclined to pay. We are now taxed to death in Europe to pay for government waste.

    A self employed person at the lower income level pays 20%tax plus 9% NICS plus class 2 pension contribution plus council tax plus VAT plus fuel duty plus plus plus.

    Our roads are not fixed, we are fighting wars we didn't want, plus subsidising the ~*# Greeks.

  • rate this

    Comment number 28.

    "All gong and no dinner". Osbourne and Cameron can talk a good government, but are utterly pathetic in action. When 99 out of the FTSE 100 companies use offshore holding companies to dodge tax, only London benefits, while the rest of the UK suffers.

  • rate this

    Comment number 27.

    However laudable this is, let's not forget that it was Private Eye's exposure of Vodafone and Goldman Sachs, and UK Uncut's tireless actions, that brought this about, not the noble inclinations of Osborne or Cameron.

    Now let's hope and pray that it is more than just the soundbites we've got used to......

  • rate this

    Comment number 26.

    We've already got rules in place to tackle this (transfer pricing etc) - they just need to be enforced. The last thing we need is yet more laws and complication!

  • rate this

    Comment number 25.

    What hope have we got on taxing 'multinationals' when we can't even tackle British companies? e.g. companies registered in the Channel Islands (I get my glasses from one).

  • rate this

    Comment number 24.

    Is this the start of the end of globalisation? I hope so but doubt it.
    Perhaps it has finally dawned on Governments that if they don't do something about the off shoring of company accounts a time will come when all companies will be off shore. Therefore no tax money for their bottomless purses.

  • rate this

    Comment number 23.

    Amazon has decimated the High Street.
    Amazon pays no tax in this country
    High St shops pay tax AND heavy rates.

    Is this fair?

  • rate this

    Comment number 22.

    Here's an idea, how about everyone pays a flat rate of tax on the income they earn in each country - if necessary the rate could differ by business type, with a lower rate to encourage manufacturing for example. No expense deductions, no armies of parasite tax lawyers and accountants. Keep it simple. Everyone pays their dues. We might then be able to afford to get rid of VAT and Council Tax.

  • rate this

    Comment number 21.

    Knock the Toires once again, when will bloggers enter into sensible debate rather than knocking anything they do not politically agree with. Sad so sad.

  • rate this

    Comment number 20.

    Credit where credit is due - these things need doing. Here's hoping that all major world Govts come together to sort out the situation with big business & tax.....

    ....the corporations have had it far too easy for far too long......

    ...we've global rules for the free movement of capitals for years - they need matching with global rules on tax & regulation.....

  • rate this

    Comment number 19.

    The public want action not words and this will be another case of talking for talkings sake instead of actually doing something to ensure people pay their dues.

  • rate this

    Comment number 18.

    Oh no! The other countries will meet our chancellor...we'll be a laughing stock! Couldn't we send someone else? Mr Bean?... Anyone?

  • rate this

    Comment number 17.


    More taxes for ordinary people and ordinary business, but nothing that might annoy our chums in big business and nothing that might jeopardise the directorships for MPs when in opposition or retired.

  • rate this

    Comment number 16.

    This will be used in 2015 as a told you so moment for re relection


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