11 April 2016 - The UK government’s proposal to make it a crime for firms to fail to stop employees helping others evade tax is welcome in principle but stops far short of the radical reform needed, Christian Aid says today.
“Legal moves like this are important, but not a substitute for greater transparency in the UK’s tax havens,” said Toby Quantrill, the charity’s Principal Adviser on Economic Justice.
“Forcing UK tax havens such as the British Virgin Islands to open up and publicly reveal the true owners of all companies they host could have a dramatic impact on financial crime
“Merely creating central registers of companies’ real owners will not do enough to stop the sort of activities exposed by the Panama Papers, so we are troubled to hear the BVI and others say that that is all they are prepared to do.
“The Prime Minister must insist on public registers, as the government is rightly introducing in the UK. It is important that the UK sets high standards for the rest of the world to follow, starting with our Overseas Territories.”
In relation to the new offence proposed, Mr Quantrill added: “UK banks and law firms played a major role in the activities revealed by the Panama Papers and the UK government is right to recognise the need to act.
“However, this new law will be hard to enforce. If the government wants it to change companies’ behavior, then it will need to convince the world that it is prepared to back it up with resources and political will required to make it effective.”
Under the new criminal offence proposed by the government, companies will be held accountable if they fail to stop their employees from facilitating tax evasion, and this will apply regardless of wherein the world the evasion takes place.
As Christian Aid showed in its report on the Swissleaks scandal last year, the poorest countries are more vulnerable to losing funds to tax evasion and corruption than richer countries, when the potential losses are considered in relation to countries’ GDP.
Corruption, tax evasion and tax avoidance can undermine fragile democracies and rob poor countries of the finance they need to invest in schools, healthcare and infrastructure.
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Notes to editors:
1. Christian Aid works in some of the world's poorest communities in around 40 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.
2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. Our strategy document Partnership for Change explains how we set about this task.
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