David Cameron seeking action on tax avoidance at EU summit

David Cameron in Brussels Mr Cameron is calling for a US-style cross-border tax information exchange

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David Cameron is urging EU leaders to back global action against tax evasion and "aggressive" tax avoidance that is causing nations "staggering" losses.

The prime minister is meeting his European counterparts in Brussels to discuss ways of cracking down on those who do not pay their fair share.

It comes amid a row over the tax paid by firms like Google and Amazon.

The CBI has warned politicians not to "moralise" about tax or rush to judgement without the facts.

The business lobby group said paying tax was not "optional" and that firms must make "responsible judgements" with the interests of their shareholders, stakeholders and society at large in mind.

'No absolutes'

But it warned politicians against engaging in a "moral debate" over the issue and said they must consult with business before introducing any new rules.

"As politicians pursue fairness it is important that any criticisms are grounded in fact and hasty solutions or political point-scoring do not trigger long term unintended consequences," the organisation's chairman Roger Carr said.

"Tax avoidance cannot be about morality - there are no absolutes."

He urged Mr Cameron and other leaders "to fix the rules internationally, not unilaterally", adding that "independent action can cost competitiveness and cause confusion".

Start Quote

Talking tough on tax, whilst continuing to usher a third of the world's wealth into UK tax havens, risks making a mockery of David Cameron's leadership at the G8 Summit in June”

End Quote Oxfam

The taxation issue is on the agenda of the latest EU summit - which will also discuss energy policy - at the request of the UK, France and Germany.

Mr Cameron wrote to EU leaders ahead of the meeting urging a US-style cross-border tax information exchange. The UK, Germany, France, Spain and Italy are currently testing such a system and want to launch it by the end of the year.

Mr Cameron also wants G8 and EU meetings to include country-by-country reporting of where companies pay their tax.

As he arrived at Wednesday's meeting, the prime minister said competitive tax rates were vital for securing investment but firms must abide by the rules.

"That means international collaboration, sharing of tax information," he said. "It is important that we make sure we act together to make sure we do everything on this agenda."

The BBC's Europe Correspondent Matthew Price said there was "growing unity" about the issue across the EU, with an estimated one trillion euros lost every year due to individuals and companies not paying as much tax as they could do.

But Labour leader Ed Miliband has accused the prime minister of not backing up his rhetoric with "concrete proposals" and said a future government led by him would be prepared to act on its own in the UK.

Low-tax regimes

After the four-hour summit, Mr Cameron will travel to Paris to meet French President Francois Hollande at the Elysee Palace where co-operation on tax evasion and avoidance as well as tackling corporate secrecy will again be on the agenda.

The meetings come two days after Mr Cameron wrote to 10 British overseas territories and crown dependencies, including the Cayman Islands and the Isle of Man, urging them to "get their house in order" and sign up to international treaties on tax. Critics claim such places, which operate low-tax regimes, are used by companies for tax avoidance or evasion.

Google chairman Eric Schmidt The party leaders have been under pressure to raise the issue with Google boss Eric Schmidt

Tax avoidance, where companies operate within the rules to avoid paying taxes, and tax evasion, which is outside the law, have risen high on the political agenda in recent months.

High-profile companies like Google, Amazon and Starbucks have faced criticism in the UK for the low levels of tax they appear to pay compared with the size of their businesses.

Speaking on Wednesday, Mr Miliband accused Google of going to "extraordinary lengths" to limit UK tax payments.

'Cat and mouse'

Deputy Prime Minister Nick Clegg said it was unsurprising that firms were trying to exploit the "crack and crevices" of national tax laws and said he had raised the issue with Mr Schmidt at a Downing Street reception earlier this week.

The government was reducing corporation tax, he said, and, in return, it expected firms to pay their fair share of tax.

He acknowledged individual countries' tax systems were often "arcane" and were struggling to keep pace with "disembodied" businesses operating across national borders.

"We have got to make sure the rules apply much more evenly and strictly across the piece and so big companies cannot play cat and mouse with different national tax administrations," he said.

Apple boss Tim Cook defended the firm's practices when he appeared before the US Congress on Tuesday, insisting it complied with both the letter and the spirit of the law.

Oxfam, meanwhile, has suggested people using tax havens are depriving the world of more than £100bn in lost revenue.

"Talking tough on tax whilst continuing to usher a third of the world's wealth into UK tax havens, risks making a mockery of David Cameron's leadership at the G8 Summit in June," its head development finance and public services Emma Seery said.


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  • rate this

    Comment number 21.

    The business lobby group said paying tax was not "optional" and that firms must make "responsible judgements" with the interests of their shareholders, stakeholders and society ...
    Why are firms allowed to use judgement to determine how much tax they should pay?

    If all us did that lets face it no one would pay any tax!

    Or do large companies have a conscience we don't know about?

  • rate this

    Comment number 20.

    Rules? What rules? Such as they were they've been undermind by successive governments, particularly 'New' Labour who caved in to the lobbying by the big accountancy firms to bring in Limited Liability Partnerships, so no matter how much they screw up their audits none of the 'partners' are liable. Wonderful for them, lousy for us. LLPs are hugely useful as tax avoidance vehicles. Ban them.

  • rate this

    Comment number 19.

    "Labour landslide. Result"

    Best cross your fingers on that one nick.

    Pull up the cuffs on anyone representing the big 3 and you will see trotters waiting for power rather than the honour of representation.

    With Mandelson in your ranks the term working class is a dirty word and he is still pulling strings.

    Baaaaaa they roar!

  • rate this

    Comment number 18.

    Why is this article about David Cameron? It's quite clear that, as stated. the issue of tackling tax avoidance by multinational companies is 'on the agenda', and many EU leaders are already more actively involved in this than Cameron. So he's written to them has he? I bet they're impressed. Sounds to me like the no 10 press office trying to make something out of nothing.

  • rate this

    Comment number 17.

    Dave knows all about Tax avoidance because it`s where daddys money came from http://www.guardian.co.uk/politics/2012/apr/20/cameron-family-tax-havens

  • rate this

    Comment number 16.

    and what about UK non doms?

  • rate this

    Comment number 15.

    First of all: Tax evasion is not illegal. It's sensible.

    2nd of all: Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment.

    It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions. ~H. Hazlitt.

  • rate this

    Comment number 14.

    Come on then Dave. Show the world the way.
    Come on, set the precedents.
    I expect to be still waiting in 2015, 2020, 2025...

    All talk and no action Dave, unless its stamping on low earning UK individuals. Its like using drones when going to war. Fire at will with all cannons blazing when there's no risk to self but mutter from a corner when there's a risk from a counter-attack. Cowards.

  • rate this

    Comment number 13.

    So Cameron wants EU nations to crack down on tax evasion and tax avoidance?

    Tricky since many many EU nations, including the most corrupt one itself, the UK, makes their not inconsiderable fortunes by selling tax avoidance packages and harbouring tax havens like Gurnsey, British Virgin Islands and the likes.

    Really, Cameron doesn't know what he is doing.

  • rate this

    Comment number 12.

    Great, if I were the french president, I'd totally listen to this guy who just came over to the mainland and threatened to leave the EU. let us know how you think we should run the union that you don't seem to like too much, Dave, we can't wait for your expert judgement.
    Seriously, DC, do you have any credibility...?

  • rate this

    Comment number 11.

    Not having to pay tax gives Google etc a competitive advantage over others in the same markets who aren't in the position to do likewise. This creates a market inequality which stifles the growth of innovative small businesses. This will ultimately do far more harm to the economy than the lack of tax revenue.

    The Govt created this issue (no tax, no problem) so it needs to fix it.

  • rate this

    Comment number 10.

    I am sick and tired of hearing how company after company are avoiding paying taxes. A significant number of people in this country are seeing their living standards eroded and the public services many of them rely on are being cut to the bone because of financial cutbacks. This government must get to grips with this situation and ensure these companies and individuals pay their fare shares

  • rate this

    Comment number 9.

    Hang on, at last there's something to vote on.
    Milliband says he'll act unilaterally.
    CamClegg give us the usual Sir Humphrey waffle.
    OK Ed, tell us how, then stand on it at the next election.
    Labour landslide. Result!

  • rate this

    Comment number 8.

    So, why is Cameron so anti-FTT (Financial Transaction Tax) which would monitor all financial transactions to anywhere, tax same, and necessarily detect illegal malfeasance. Is he afraid the London group has about the same level of moral performance as the US Federal group? Is he afraid of "criminal" detection?

  • rate this

    Comment number 7.

    If our Dave didn't waste tax money and spent it properly then perhaps people might be more willing to pay it.

  • rate this

    Comment number 6.

    Isn't it reasonably straightforward to tax companies selling products and services in Britain?

    If tax legislation allows companies to avoid paying tax then simplify the legislation so they have to.

  • rate this

    Comment number 5.

    Sure, this can be put before the EU, and it will take a long time.

    So why doesn't Cameron can start by legislating in the UK, so that companies like Google and Starbucks don't get away with avoiding tax.

  • rate this

    Comment number 4.

    I find it almost laughable to hear politicians berating big companies about tax when they aren't doing anything illegal. who wouldnt pay less tax if they could? as annoying as the situation is, they need to stop moralising and start acting

  • rate this

    Comment number 3.

    Fat chance Cameron!

    Does anyone still take Little Lord Fauntleroy seriously, the master of the long grass and inaction.
    Calling on those in the EU to be brave for him rather than drawing a line in the sand regarding the UK and its interests.

    Our democracy is a joke and we keep voting the same trough watchers in every time.

    Wakey Wakey tax cattle you can't even see the wood for the trees!

  • rate this

    Comment number 2.

    So "Businesses must make responsible judgements" when it comes to paying tax. I don't remember seeing that box on my self assessment form this year...


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