2 February 2016 George Osborne’s announcement that multinationals should have to publish currently secret information about their global affairs could hail a tremendous breakthrough in the war against tax dodging, Christian Aid says today.
“We are excited to see that the Chancellor has accepted the need for multinationals to go public about the business they do, and the taxes they pay, wherever in the world they operate,” said Joseph Stead, Christian Aid’s Senior Adviser on Economic Justice.
“What is vital now is that Mr Osborne follows up his good words with immediate action.
“With the UK and scores of other countries, including the poorest, haemorrhaging billions every year as a result of the irresponsible tax practices of multinationals such as Google, we cannot afford any delay. Rapid action is the only way to rebuild the public trust in our companies and our government.”
Christian Aid believes the Chancellor could begin by introducing the reform very rapidly within the UK – this is something that is within the power of the UK Government and should be possible within a matter of months.
The reform in question is public country-by-country reporting, which in the wake of the Google tax row Mr Osborne has said he favours. It would see multinationals publicly revealing details such as their taxes paid, profits made, staff employed and assets owned, separately for every country in which they operate.
Such information is hugely powerful because it will help to highlight which multinationals are shifting their profits into tax havens in order to avoid or even evade taxes in the countries where they are due.
This in turn will generate public demand for governments to act against companies seen as abusive – and give companies an incentive to clean up their own acts. Country-by-country reports will also highlight responsible behaviour by companies that are already contributing their fair share of tax in all jurisdictions where they operate.
The UK Government is currently drafting regulations requiring multinationals to provide country-country reports to HMRC and it would be simple to make the reports public at the same time.
Polling shows that the UK public are overwhelmingly in favour of increased transparency, while a recent survey of FTSE 100 companies by Christian Aid showed that the majority would accept such a move.
Mr Stead added: “At the same time as introducing the reform within the UK, the Chancellor should push for its adoption across Europe and by OECD and G20 countries. If the UK takes the lead, then there is little doubt that other countries will follow. There is already a proposal on the table from the European Parliament that the UK could support immediately.
“Finally, Mr Osborne, should ensure that there is absolute clarity about what information multinationals have to make public. The OECD has already developed a template for country-by-country reporting to tax authorities - and this should be the basis for all public reporting.
“The OECD template contains most of the information we want to see, and using this standard would reduce compliance costs for businesses”.
Christian Aid has campaigned for public country-by-country reporting since 2008 because the reform would help developing countries and others to catch up with multinational tax dodgers and provide information to help improve the design and effectiveness of tax rules.
All the main UK political parties have supported public country-by-country reporting. The Conservative Party’s manifesto pledged to consider the case for making the information public on a multilateral basis while Labour, the SNP, the Liberal Democrats and the Green Party have all expressed their support.
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