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EU on verge of ‘historic breakthrough’ for tax justice

24 May 2013 - An EU decision, reported late yesterday, that European multinationals will be required to report the profits made and taxes paid in every country where they operate,  would, if enshrined in law, be an ‘historic breakthrough’ in battling tax evasion, Christian Aid said today.

The organisation estimates that developing countries lose an estimated US$160bn in tax revenues every year, much of it the result of multinationals shifting profits out to low or no tax jurisdictions.

Christian Aid was the first major non-governmental organisation to call for country-by-country reporting across every corporate sector five years ago. It has campaigned on the issue ever since, saying the transparency the measure offered would facilitate the quicker identification of tax abuse.

Christian Aid’s  Senior Economic Justice Adviser, Joseph Stead, said today: ‘The EU decision, if it becomes law, is hugely welcome.  It will go a long way towards making transparent - and helping curb - the shifting of profits to tax havens to reduce tax liabilities in the country where the money was made. It will also help create a level playing field. At present, multinationals making extensive use of tax havens have a financial advantage over those that don’t.

‘Under present accounting rules, they can conceal their tax strategies by presenting global accounts in which it is impossible to determine where profits are made, and how much tax has been paid on them.

‘However, the demand for transparency over corporations’ tax affairs is growing with tax rapidly becoming a reputational issue for multinationals. Country-by-country reporting means that governments, and civil society organisations campaigning for tax justice, will quickly be able to spot where abuses may have occurred and bring those to public attention.

‘This move also helps create a climate in which country-by-country reporting must ultimately be extended globally. The UK will next month preside over a meeting of the G8 in Northern Ireland. That will be a major opportunity for David Cameron to influence other countries beyond the EU to look at similar requirements.’

A recent ComRes poll, commissioned by Christian Aid, found a third (34 per cent) of Britons said that they were boycotting the products or services of a company because it does not pay its fair share of tax in the UK.  Almost half (45 per cent) said they are considering a boycott. In addition, two out of three (66 per cent) Britons believed tax avoidance to be morally wrong, And a remarkable four out of five respondents (80 per cent) said that multinationals’ tax avoidance made them feel angry.

In a recent report Who Pays the Price? Hunger: The Hidden Cost of Tax Injustice, Christian Aid said the scandal of world hunger could soon be ended if the revenues that developing countries lose through tax dodging were available to them to invest in agricultural development.

One in eight of the world’s population goes to bed hungry, with the UN’s Food and Agriculture Organisation (FAO) recently citing US$50.2bn per annum, on top of existing funding, as the cost of creating a ‘world free from hunger’ by 2025.

Christian Aid’s report said that amount, and more, would be raised every year if governments ended tax haven secrecy and curtailed profit-shifting and tax dodging by multinationals in poor countries.

Christian Aid, along with some 200 other agencies,  is part of the Enough Food For Everyone IF… campaign, which has called on Prime Minister David Cameron to use the G8 summit to make tax justice a major weapon against poverty and hunger.

The campaign calls for a new international convention on tax transparency, which G8 countries should sign up to, and then pressurise tax havens to ratify.  It also wants the true ownership of companies and trusts to be put in the public domain – and the introduction of country-by-country reporting.

For further information please contact Andrew Hogg on 0207 523 2058/07872 350534 or 24 hour press duty phone – 07850 242950  


 

Notes to editors:

1. Christian Aid works in some of the world's poorest communities in around 50 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 is a member of the Enough Food For Everyone IF campaign, a collection of more than 180 agencies in the UK that is calling on governments to address some of the key factors causing global hunger, which at present afflicts nearly a billion people. As well as providing aid, it wants governments to stop big companies dodging tax in poor countries, prevent poor farmers being forced off their land, particularly by biofuel concerns, and insist on greater governmental and business transparency.

3. Christian Aid has a vision, an end to global poverty, and we believe that vision can become a reality. We believe that the underlying causes of poverty were made by, and can be ended by, human action. Our strategy for building the power of us all to end poverty is embodied in a new report ‘Partnership for Change’: http://www.christianaid.org.uk/Images/2012_strategy.pdf

4. Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development.  Further details at http://actalliance.org

5. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire

6. For more information about the work of Christian Aid visit http://www.christianaid.org.uk