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G8 campaigners focus on tax evasion

17 June 2013

PA

COMPANIES that dodge paying taxes are "robbing God", the Archbishop of York said on Sunday, on the eve of the G8 summit.

At a special service organised by the IF campaign against global hunger at St Macartin's Cathedral, Enniskillen, Northern Ireland, where the summit is being held, Dr Sentamu suggested that, if big companies could be stopped from "dodging taxes in the two-thirds world", millions of people could "free themselves from hunger".

"They're dodging millions of pounds every day," he said. "Indirectly robbing the poor of education, health, food, employment and sustainable development . . . They are not only robbing people but God himself, who calls us all to love mercy, do justice and walk humbly before him."

He called on the G8 to close international tax loopholes.

The Prime Minister has listed tackling tax evasion as one of his three priorities as president of the summit, alongside trade and transparency.

On Saturday, the Government announced that it is to introduce new rules requiring companies to obtain and hold information on who owns and controls them. This information is to be held in a central registry maintained by Companies House, where it will be accessible to law enforcement agencies and tax authorities. A statement from the Treasury said that the register would "make it harder to launder money, evade and avoid tax, finance terrorism, bribe officials, hide stolen assets and evade financial sanctions".

Whether the register should be open to the public will be the subject of a consultation this summer.

On the same day, David Cameron heralded an agreement by the UK's Overseas Territories and Crown dependencies to sign up to the Multilateral Convention on Mutual Assistance in Tax Matters, an initative led by the Organisation for Economic Cooperation and Development (OECD) to clamp down on tax evasion.

After the meeting at Downing Street, the Prime Minister said: "It is important we are getting our house in order. . . It means that Britain's voice at the G8 . . . will be stronger."

Territories will only have to share information that they already collect, and the registers will not be public.

Richard Hay of the International Finance Corporation Forum, told The Sunday Telegraph, that, given that other countries did not collect data on beneficial ownership of companies, "moving ahead of others risks an own goal for the UK".

At the summit, which concludes on Tuesday, Mr Cameron is expected to urge the other G8 countries to publish action plans on increasing transparency and sharing information about tax.

Murray Worthy, a campaigner at War on Want, said that there was "little hope" of Mr Cameron securing a breakthrough on tax at this G8: "It is an outrage that the Government continues to allow multinational companies and rich individuals to use Britain's tax havens to dodge taxes around the world, robbing the world's poorest countries of vital revenue. . . If his Government had been truly serious about tackling tax dodging, he would have legislated to abolish the UK's tax havens, and clamped down on tax dodging companies like Starbucks, Amazon and Google."

Research by Action Aid suggests that 98 of the companies in the FTSE top 100 use tax havens. On Sunday, a letter signed by 1500 business group, and companies called for the register of ownership to be made public. The letter reads: "We call for unanimous G8 support for key measures including automatic information sharing among all countries, a public registry showing beneficial ownership of all companies, trusts and foundations, and getting multinationals to public a country by country breakdown of their accounts."

A new Christian Aid report, on behalf of the IF campaign, published on Friday, argued that the British Overseas Territories and Crown Dependencies are "at the centre of a global financial system that encourages crime, corruption and aggressive tax avoidance in developing countries". It highlights research suggesting that these territories are the world's largest provider of foreign direct investment to developing countries,

responsible for more than one in every US$10 invested. This is in vast disproportion to their GDP. For example, the British Virgin Islands was a conduit for foreign direct investment more than 860 times greater than the size of its domestic economy in 2011.

The report, Invested Interests: The UK's Overseas Territories' Hidden Role in Developing Countries, argues that investment is often structured through these jurisdictions "specifically to enable tax dodging in poor countries". Other abuses they facilitate include the laundering of crime money, and "round tripping", in which money originating in the developing country where it is to be invested is sent offshore and then returned disguised as foreign funds to qualify for tax breaks.

Christian Aid is calling for developing countries to be involved in international tax reform.

The IF campaign issued a statement on Monday afternoon saying that there were "worrying signs" that developing countries could be frozen out of a deal on tax dodging. The IF campaign is running a live blog from the G8 Summit.

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