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
    +6

    Comment number 321.

    It all ties in. Inequality in the west is growing year by year. I am not some winging lefty but a person that realises that the more unequal society gets the less productive it becomes.

    Even the IMF is worried about this trend

    Hypercritical multi nationals are just part of the problem.

  • rate this
    +2

    Comment number 320.

    all these politicians should stop calling these companies in to ask questions. If i ran Google, Amazon or any of the others, i'd tell the politicians where to go and refuse to keep going and listening to them whinge.

    if the politicians used as much energy sorting out the stupid tax laws as they did calling these companies in, they could close down these loopholes in a few days

  • rate this
    +3

    Comment number 319.

    If the government are truly upset at google who's advertisers pay for people to see and click on their adverts than charge google a tax for having people click on the advert. If that happens I may even turn my ad blocker off and start clicking on the links.

  • rate this
    +3

    Comment number 318.

    300. We are largely to blame for being brainwashed by the rightwing press into believing that privatisation etc etc is in the National interest when what has been done at least in the City is done in the Rich's only interest. So gullible are we. Our destructive class system is also dysfunctional. You don't OWN your home the Bank does. You work longer the Rich don't.

  • rate this
    +4

    Comment number 317.

    15.Sally

    "...Tax evasion is not illegal. It's sensible..."

    ===

    It's illegal by definition. There's an offence called just that. "Sensible" is not its opposite either. It's illegal to smash a window, but sensible if it's to rescue a child from a fire.

    Sometimes you're interesting, but you're all over the place and apparently plain daft here.

  • rate this
    +4

    Comment number 316.

    Expect an avalanche of nothing

  • rate this
    +9

    Comment number 315.

    274 Jaw dropping truth - produce some figures for the 'swing the leaders', not Daily Mail editorials.. Gov says total benefit fraud £1.8 billion, tax fiddles £42 billion. Local cafe pays corporation tax at 22%, Starbucks at 1%. Who's the thief?
    307 - those who voted agaisnt same sex marriage presumably agree with bible - usury is banned.

  • rate this
    +5

    Comment number 314.

    Cameron could well do with a close inspection of his own Cabinet where Tax Avoidance is concerned. There's Grayling's Property Empire, all bought on Taxpayer's money and the "Charitable Status, Tax Exempt Companies he's worked for plus there's Osborne's Tax Free Trust Fund (4000,000 and rising) for starters!

  • rate this
    +5

    Comment number 313.

    my biggest worry is that by not paying the same percentage in tax as national companies multinationals will gain a competitive advantage over smaller companies.

    Amazon pays very little corporation tax and this must be having a substantial effect on our high streets

  • rate this
    +3

    Comment number 312.

    Buy from SME's until the big corps get the message, together they employ more people and they most probably pay tax locally. Right off to look up a local bookshop on Google, O dear...

  • rate this
    +4

    Comment number 311.

    I have some sympathy with the Google argument. The directors of the company have a duty to maximise profit within the framework of the global tax laws. It's the job of governments to ensure that ALL companies pay their fair share of tax and to ensure a "level playing field" for both national and multinational companies. Government must control capitalistic greed, if society to reap the benefits.

  • rate this
    -9

    Comment number 310.

    If anyone can pull it off David Cameron will, he has a good relationship with Angela Merkel and most other European countries seem to be in agreement re taxation.

    I think he will pull it off just as he did our reduced rebate, despite Labour's spin on it.

  • rate this
    -2

    Comment number 309.

    Hard to get too excited by all this - after all, the EEC will simply spend the tax on £175 bottles of wine for their meetings, where they dream up yet more absurd rules and regulations.

  • rate this
    +5

    Comment number 308.

    How convenient, for DC to be able to blame implicitly the EU for this, rather than his own lawmaking government.

    It's too easy and it shows.

    I'd have thought those whom he addresses will probably splutter a bit, given the UK's resistance to cross-border cooperation on so much else, too.

  • rate this
    +1

    Comment number 307.

    I don't agree with Muslims on many things, but nobody is wrong all the time. Bring in a law against usury with those found guilty stoned to death.

  • rate this
    +1

    Comment number 306.

    I must agree with those who say we live in a world where democracy rules. Money rules and always unfortunately will.

    The one good thing is these forward looking, long term thinking companies are starving their future generations of customers who won't be able to avoid a PC or overpriced tablet and so will not bother the likes of apple and Google.

    Which is hilariously funny actually.

  • rate this
    +3

    Comment number 305.

    It must be feasible to add an extra tax on sales by non-resident companies - like another VAT. It could be called a 'Withholding Tax', which some countries use. When due corporation tax has been agreed for that year it can be offset against the Withholding Tax.
    It is something the EU could do at a stroke.

  • rate this
    +2

    Comment number 304.

    @287.adriancannon,
    I'd hardly call 14th century Britain a libertarian free-market society, considering people would have still been paying taxes to the church and the crown.
    In fact in the history of the world there has been no libertarian free-market society so don't bother trying to give me 'examples' as to why it couldn't work.

  • rate this
    +3

    Comment number 303.

    @ 284 Directors have a Fiduciary reponsibility to the company only. And no direct responsibility to shareholders.

    Few shareholders these days are true investors. In the main, they are seeking a short term (annual) dividend on their shares, and will move their capital based solely upon their rate of return.

    As such they are a drain on the company which many directors refuse to see.

  • rate this
    +4

    Comment number 302.

    292. Actually both houses in our sham democracy ARE the Corporations or act as their interest. You don't believe you go to the polls so we can have a fair and decent country do you. That avenue was closed down by Thatcher and Blair. Greed Kingdom is this country's name. GB = Greed Kingdom.

 

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