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
    +3

    Comment number 615.

    610. Bastiat “Why are you people here decrying the amount of tax they pay?”

    Simple, in a civilised and fair society, each contributes according to their measure through our ELECTED government.

    Why should those who can afford to decide to opt out of their responsibilities while taking all of the benefits that the society offers and provides?

  • Comment number 614.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -1

    Comment number 613.

    611.All for All
    599.All for All
    587.All for All
    570.All for All

    I hope you don't mind me asking, but do you ever sleep? Or, better still, ever take a holiday?

  • rate this
    -2

    Comment number 612.

    #1610: "You should all be decrying the fact that the government takes the fruits of your labours at all!"

    Ah, but it is never the fruit of their labours, is it ... the common thread is always "those who earn more than I do should pay more tax".

  • rate this
    -4

    Comment number 611.

    B@589
    Agreed, in part!
    Exquisite transparent exhibitions of incoherence

    Let's hope 'message' clear to all: the 'democracy' of your usage - sadly of many other casual usages, all too prevalent - is not the real thing

    Any 'democracy' not founded on 'equal partnership' for 'equal liberty', can enjoy only the pretence of democracy, in hard-times to fall, even - as you hint - 51% maybe to slay 49%

  • rate this
    -2

    Comment number 610.

    Why are you people here decrying the amount of tax they pay?

    You should all be decrying the fact that the government takes the fruits of your labours at all!

    No civilised society can be predicated upon institutionalised criminal activity, theft. Only an immoral, totalitarian state can spring from such a clump of dirt, and cast us in its overbearing shadow.

  • rate this
    +1

    Comment number 609.

    Getting a consensus will never happen and Osborne knows this. This is why he is there so when it all goes pear shaped he can say he tried and the status quo continues exactly what he wants. He must think we are as dumb as he is to get taken in by such a pathetic stunt.

  • rate this
    +5

    Comment number 608.

    Yes everyone who owes tax should be chased for it.

    This includes 'cash in hand plumbers' to millionaires.

    However the obsession that some in this forum have with ONLY chasing the rich, as if they are criminals, baffles me.

    Every Country that chased out the rich faced decades of poverty afterwards, e.g old Russia, Portugal. It doesn't help, it just smacks of jealousy, one of the 7 deadly sins!

  • rate this
    +4

    Comment number 607.

    People have long memories.

    I've not read the Sun since 1989.

    and I've had my last Starbucks.

  • rate this
    0

    Comment number 606.

    593.Tio Terry - You are judging Labour with the benefit of hindsight. While I do think Labour could have done more the predominant consensus of the time was that small state trickle down was working well. In 2008 USA sub prime fiasco happened and small state trickle down was revealed for the sham scam it is. Problem is nobody has the guts to revert to the ideas we need like co-ops and intervention

  • rate this
    +2

    Comment number 605.

    Camerons old man made his wealth by owning a Company which gave advise about how to avoid paying UK tax. All thanks to Thatcher changing the rules on the amount of money you could take out of the UK without paying tax and depositing in tax havens around the world- bit rich the Tories lecturing the rest of world then.

  • rate this
    0

    Comment number 604.

    @601. Muishkin

    I agree - everybody just accepts that they are doing everything the correct way. I see the current government as nothing more than a bunch of rich public school boys that only look out for their own interests -

    Not because they are bad people, but because they have literally no idea what real life is like for the person on the street!

  • rate this
    0

    Comment number 603.

    Once it may have been reasonable for a company to report profits in whichever tax jurisdiction suited the company. The company would employ local staff, been tenants in local office space, used local support services, and bought business inputs from local suppliers, all of which generated local tax revenues.

    The internet changed all this. Local costs became miniscule. Local taxes became nil.

  • rate this
    +1

    Comment number 602.

    #597
    But if they have earned it they should not therefore assume extra responsibility for more success.
    #597
    A flat tax would easily pay for a state that looks after the essentials.

  • rate this
    +1

    Comment number 601.

    Nothing will change,America is run by wall st and the EU is run by our big buisness,all this talk of making corporations pay tax is nonsense designed to appease the people.We need a new form of politics with new partys that genuinely represent and have the best interests of the people at heart.There is not a single party in this country that represents working class people

  • rate this
    -2

    Comment number 600.

    This is just lip sevice.

    The UK tax system is designed for those who can offerd good accounts to get round the system. Alway has been always will be.

    I bet George himself takes advantage. Don't insult my intellegents by sying your going to change it George.

  • rate this
    -3

    Comment number 599.

    rock @578
    "how is it fair"?

    That we feed our infants, teach our children, heed due authority, care for sick & frail, hope to look back on a life well-spent, to die with best hope for our loved-ones and those to come?

    Main 'problem' with progressive tax, is 'progressive' income, incompatible with equal liberty the foundation of genuine democracy, without which 'our rule' is by un-caring Mammon

  • rate this
    -3

    Comment number 598.

    Recent article in the economist about how the rich have £20 Trillion stashed away.....this would clear the worlds debt.......why is the government not going after this rather than persecute a plumber who allegedly owed £50 thousand ?

  • rate this
    -10

    Comment number 597.

    "How is it fair that anyone earning over a certain amount must have a higher tax percentage"

    Because having spent so much time making money they will understand little of the world. This is why people got a proper education years ago. Despite having more than enough for their needs they will hoard or squander whilst the disabled and unfortunate starve. So the majority use force to get morality.

  • rate this
    -1

    Comment number 596.

    The problem is lots of Government pockets have probably be lined while the Joe Public have been shafted and we can do nothing with the corruption EH!

 

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