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
    -2

    Comment number 101.

    How much tax do Trade Unions pay on their earnings?

    Or political parties?

    And why are some Trade Union subscriptions tax avoidable?

    It seems it's not just Google and Amazon who don't like paying taxes, so Ed & Dave should look a bit closer to home too.

  • rate this
    0

    Comment number 100.

    For once CBI bosses have got it right, Cameron shouldn't moralise about tax especially as those in Westminster are pushing for a payrise in excess of that allowed to public service workers this year. If Company bosses have to forgo payrises, then govt should too. One quarter's good economic results do not a recovery make.

  • rate this
    +22

    Comment number 99.

    Dave is the right man for this particular job why? because

    David Cameron's father set up offshore investment funds which explicitly boasted of their ability to remain outside UK tax jurisdiction.

    Just the man to sort out tax avoidance LOL

  • rate this
    +1

    Comment number 98.

    For once I can say this; Well done Mr Cameron.

    However if we are taking tax avoidance we must start at home, with The channel islands & Isle of Man, Gibraltar & The British Virgin Island's, where rich Britons hide there wealth from HMRC, there are also loads of gambling sites like Jackpotjoy and high-street names such as Specsavers making a mint whilst paying zero corporate taxes to HMRC.

  • rate this
    -11

    Comment number 97.

    We need to encourage as many Google's, Amazons, Starbucks, Apples as possible. To do otherwise is insane!

    Businesses create jobs, generate share dividends, and provide cheap products. All of which my family makes, or saves money from, to spend and invest in other areas of our economy. Enterprise benefits us all.

    Taxation and redistributing wealth destroys wealth creation, impoverishing us all.

  • rate this
    -2

    Comment number 96.

    13. Shoogly Peg
    50 MINUTES AGO
    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,

    You genuinely believe the UK is the most corrupt nation in the EU? Do you know what countries are in the EU?

  • rate this
    +2

    Comment number 95.

    #49 Monaco a tax avoidance paradise it's football team plays in the French league so why is it a separate entity

    Because it is a separate country. Originally a pirate base but part of Republic of Genoa became independent in 17th C, conquered by France in 1793. With fall of Napoleon Monaco became part of Kingdom of Sardinia and was granted independence by Sardina and France in 1860

  • rate this
    +3

    Comment number 94.

    Well done DC...the knockers will still knock you for trying to do what's right.

    @84.Jaw dropping truth , not sure if you are a pro troll but your comments are bewildering.

    Everyone has a moral obligation to pay tax and contribute to our society.

    I work in business and know some companies that would literally rather flush money down the toilet than give it to the tax man - pay your way.

  • rate this
    +2

    Comment number 93.

    The media and political mantra states that if we don't all act at once they will have us over a barrel and we lose?

    How so I say, because the bottom line is access to consumers and ours are plentyful and growing even with austerity. Does anyone truely believe all the power lies with the corporates, do as we say or we restrict your access to our markets or levy your transactions.

  • Comment number 92.

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

  • rate this
    +7

    Comment number 91.

    The reason governments reduce corporation tax rates is so that they can attract global companies to set up businesses in their country. This is why the UK is continually cutting its own rate.

    If the EU wants to address this then they need to harmonise tax rates across all twenty-seven member states so no-one has an advantage.

    That should get the Eurosceptics frothing at the mouth.

  • rate this
    +7

    Comment number 90.

    Cameron pushing EU on tax avoidance, ha, ha, ha, ha, ha. Look at the City of London first Mr Cameron! pot, kettle , black! I suppose he will try anything to try and con the sheeple to vote for him again!

  • rate this
    -1

    Comment number 89.

    If you can't beat them join them.
    Use companies to reduce the govts income. Try to use multiple off-shore companies, and work as contractors. Buy goods at a personal level from off-shore companies that you control (perhaps with other like-minded individuals to reduce admin costs), which bought the goods in volume from low-labour cost countries. Pay yourself dividends in hidden accounts.

  • rate this
    0

    Comment number 88.

    Either he is going to Europe to ask for permission to change the tax rules here which would be a pretty sorry state to be in or he is wasting his time when he should be getting on with changing the tax rules here.
    We need to tax corporations that get their money from the UK and also offer businesses that get their money from outside the UK a good tax deal. It is not that hard to work out!

  • rate this
    +3

    Comment number 87.

    I find this all just amazing. On the one hand we have Milliband having a go at Google. It was the Labour Party through Gordon Brown who agreed and signed international agreements to allow this. Cameron has known about it since he was Prime Minister and two years later, after much negative publicity, he decides to talk about it. Cameron and the word useless go together.

  • rate this
    +2

    Comment number 86.

    60.sean

    Closing loopholes is simple. How about simplifying the tax system? Flat rate tax for example. Everyone pays the same percentage. No loopholes.

    Loopholes are there by design. If you don't want loopholes to be used they shouldn't be there in the first place. You can't complain when people pay less tax than they are legally obliged to.

  • rate this
    +2

    Comment number 85.

    Seem to remember that HMRC had an enormous team of 10 or so individuals looking into tax avoidance and evasion of UK companies in the various off shore havens, if Flashman wants to get real he needs to invest 10X the resources this team has. !!!

  • rate this
    -5

    Comment number 84.

    It is every tax payers duty to avoid as much tax as possible. Any kind of social compact between tax payer and the Govnt has long ago been broken by the Socialist, While Life long Benefit life-stylers and Islamic-Terrorist. 3 rd World immigrant lounge in Knightsbridge mansion in luxury at the tax payers expense. Its is a moral duty to avoid tax. Until this end well done Google and the rest.

  • rate this
    +2

    Comment number 83.

    DC would have some credibility if he was consistent. It's well within his authority/remit to take action on these tax havens many of which are British Dependencies.He cannot have a proposal to practically address tax avoidance while at the same time objecting to a financial transaction tax, except that the latter is EU in origin and involves working with other countries for the common good.

  • rate this
    +15

    Comment number 82.

    Knowing the tory mentality, I would like to know what their hidden agenda is in this? Is it simply that Cameron can fail to legislate against the corporate tax dodgers, and tell us he tried his best?

 

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