Multinational corporations and wealthy investors trying to conceal their offshore holdings and earnings are the target of a new tax network set up by the world’s leading G8 industrial nations.
In an agreement reached at the G8 summit in Northern Ireland, the G8 have agreed to police internal companies by setting up a register of beneficial owners.
The aim is to lift the curtain of nominee directors and to identify the individuals or companies that own the cash passing through offshore companies.
Britain’s Companies House will spearhead the crackdown
Announcing the move, Chancellor George Osborne said: “The playing field is changing. The world is looking at how tax is paid across borders in a different way. This agreement means no more moving money around the world through networks of companies that ends somewhere that asks no questions and for the least tax.
Veil of secrecy
“The world will not put up with it anymore, which is why we progressed further in two days than in the two previous decades discussing this policy.”
Osborne and Prime Minister David Cameron were able to leverage agreement by pulling Britain’s Crown Dependencies and Territories into line prior to the summit.
After years of picking tax laws apart and pulling a veil of secrecy over transactions and ownership, all of Britain’s tax havens have confirmed they will comply with the new accord.
The Cayman Islands, Bermuda, Channel Islands, Isle of Man and Gibraltar – just a few of Britain’s offshore financial centres – are reckoned to confidentially manage around a fifth of the world’s offshore companies and money.
Although the G8 agreement spells out how offshore companies will be brought to book, the wording was unclear about offshore trusts, which are also hosted by the havens.
“The world’s going to get tax rules for the 21st century,” said Osborne. “The aim is to make big companies and individuals pay tax where they make their money, not where it’s managed.”
Osborne explained many countries have gripes with multinational companies about trading across borders.
“If a company makes a sale to someone in Britain, then they earned that money in our country and should pay tax on their British profits in Britain,” he said. “At the moment, if the invoice is raised in another country with lower tax rates, the company will opt to pay any tax there.
“Every company has an owner who ends up with the money. They are the people we want to identify and tax appropriately.”
About John Cassidy
