Belfast Telegraph

Thursday 28 August 2014

G8 summit: UK hopeful of 'concrete progress' on tax rules as second day of event begins

World leaders pictured on Tuesday morning as talks begin on day two

Prime Minister David Cameron walks to lunch with US President Barack Obama and Irish Prime Minister Enda Kenny (right) during the G8 Summit on Lough Erne near Enniskillen
Prime Minister David Cameron walks to lunch with US President Barack Obama and Irish Prime Minister Enda Kenny (right) during the G8 Summit on Lough Erne near Enniskillen
ENNISKILLEN, NORTHERN IRELAND - JUNE 18:  Leaders (L-R) German Chancellor Angela Merkel, Russia's President Vladimir Putin, Britain's Prime Minister David Cameron, US President Barack Obama, and French President Francois Hollande, stand for the 'family' group photograph at the G8 venue of Lough Erne on June 18, 2013 in Enniskillen, Northern Ireland. The two day G8 summit, hosted by UK Prime Minister David Cameron, is being held in Northern Ireland for the first time. Leaders from the G8 nations have gathered to discuss numerous topics with the situation in Syria expected to dominate the talks.  (Photo by Matt Cardy/Getty Images)
ENNISKILLEN, NORTHERN IRELAND - JUNE 18: Leaders (L-R) German Chancellor Angela Merkel, Russia's President Vladimir Putin, Britain's Prime Minister David Cameron, US President Barack Obama, and French President Francois Hollande, stand for the 'family' group photograph at the G8 venue of Lough Erne on June 18, 2013 in Enniskillen, Northern Ireland. The two day G8 summit, hosted by UK Prime Minister David Cameron, is being held in Northern Ireland for the first time. Leaders from the G8 nations have gathered to discuss numerous topics with the situation in Syria expected to dominate the talks. (Photo by Matt Cardy/Getty Images)
US First Lady Michelle Obama chats with Fionnuala Kenny, wife of Taoiseach Enda Kenny (left) and her two daughters Malia and Sasha (right) the Gaiety Theatre, Dublin for a special performance of Riverdance.  PRESS ASSOCIATION Photo. Picture date: Monday June 17, 2013. Photo credit should read: Julien Behal/PA Wire
US First Lady Michelle Obama chats with Fionnuala Kenny, wife of Taoiseach Enda Kenny (left) and her two daughters Malia and Sasha (right) the Gaiety Theatre, Dublin for a special performance of Riverdance. PRESS ASSOCIATION Photo. Picture date: Monday June 17, 2013. Photo credit should read: Julien Behal/PA Wire

The UK is hopeful of achieving "real concrete progress" on tightening international tax rules as the second day of talks at the G8 summit in Co Fermanagh begin.

Chancellor George Osborne said hopes are high of moving forward to bring in changes to world tax rules which allow rich companies and individuals to avoid paying their fair share.

Prime Minister David Cameron has put action on tax havens and transparency about company ownership at the heart of his agenda for the two-day meeting of leaders of eight of the world's largest economies at Lough Erne.

And Mr Osborne made clear today that he expects the G8 countries - the UK, US, France, Germany, Italy, Canada, Japan and Russia - to make progress on the issue, after Britain secured agreement from 10 of its overseas territories and Crown dependencies, widely viewed as tax havens, to sign up to a new OECD standard on the exchange of tax information.

Mr Osborne said the UK wants to change outdated international tax rules which allow companies to locate their profits in low-tax countries and avoid paying taxes on them in the countries where they were earnt.

G8 summit: live video

Big companies such as Google, Amazon and Starbucks have come under fire in recent months for operating legally within this tax system to minimise the amounts they have to pay.

Speaking from Lough Erne, where he is joining the prime ministers and presidents for today's session on tax, the Chancellor told BBC1's Breakfast: "I think we can do quite a lot and I think you are going to see some concrete steps here at this summit to change the rules about tax that have been in place for decades but, as the world has developed, haven't really kept up.

"As a result, individuals can hide the taxes they are supposed to pay in the international banking system and companies are able to shift their profits around the globe, away from where those profits are actually generated and therefore they don't pay tax.

"That's really important because that is less money for our NHS and our schools and the things we need to invest in."

Setting out his hopes for today's talks, Mr Osborne said: "We can rewrite the international rules that allow companies to shift their profits away from the UK or any other country where they are doing business.

"Obviously we have to get international agreement, and there is no better place to start than when you have got eight of the largest economies in the world sitting round the table. I think we will see real concrete progress on that today."

A key feature of the proposals on the table at Lough Erne is support for a new regime of exchange of tax information, so that countries will be able to know details of offshore accounts held by companies or individuals overseas.

Britain is planning to take part in a pilot scheme later this year to trial the new rules ahead of the introduction of new OECD standards, and wants to sign up other countries.

Mr Cameron also wants greater transparency about so-called "beneficial ownership" to make clear who is the ultimate owner of a company and make it more difficult to operate "shell companies" which often carry out no business activity, but exist only to hide the true source of income from tax authorities.

"We are insisting that there is an automatic transfer of information between countries and that will mean that we can find out what is happening in other jurisdictions," said the Chancellor.

Britain has often been seen as an international black sheep on tax havens, thanks to the practices in its overseas territories and crown dependencies like Bermuda, the Cayman Islands, Jersey, Guernsey and the Isle of Man. But Mr Osborne said their agreement in London on Saturday to accept the new OECD code showed the UK was "putting our house in order".

"All of these jurisdictions have actually now signed up, thanks to our pressure and discussions with them, to the automatic transfer of information," he said.

And he added: "We are crucially making progress on beneficial ownership - in other words, companies knowing who owns them.

"This is all technical stuff, but it is important because it is the wiring of the tax system and by putting our own house in order I think we can also try to achieve more broad international agreement."

Anti-poverty campaigners have welcomed Mr Cameron's decision to focus the G8 agenda during Britain's year-long presidency on tax transparency, arguing that it is the poorest countries in the world which lose out most from individuals and companies secreting their wealth in offshore boltholes.

However, Adrian Lovett, Europe executive director at development campaign group One, warned that any agreement on the exchange of tax information must include the developing world, and not just the rich nations of the G8.

And he called for public registries of tax information, to allow investigations not only by tax authorities but also by campaign groups and the media.

"The G8 must also ensure that the system they put in place for sharing tax information involves developing countries from the start," said Mr Lovett.

"By taking these steps, the G8 will not only put its own house in order, but do so in ways that help the fight against extreme poverty. The UK must continue to lead the way and lobby its G8 partners, with no let-up in pace or ambition. G8 leaders must decide whether they want to shape the transparency revolution or resist the tide of history."

Mr Cameron was also hoping for a show of unity over the civil war in Syria, which has largely overshadowed the economic priorities of the summit.

Over dinner last night, Western leaders faced down Russian President Vladimir Putin over his support for the regime of dictator Bashar Assad.

Downing Street welcomed a "very positive" response from the Russian leader, reviving hopes for a peace conference to pave the way for a political transition in the war-torn Middle Eastern state.

While nobody at the summit was in any doubt about the continuing differences between Moscow and the West, sources suggested Mr Putin was ready to sign up to five key principles discussed at last night's dinner.

As they dined on local Northern Irish fare, Mr Cameron asked fellow leaders - Mr Putin, Barack Obama, German Chancellor Angela Merkel, French President Francois Hollande, Italian PM Enrico Letta and Japan's Shinzo Abe - to consider whether the G8 can come together behind a consistent view on:

:: Demanding access for humanitarian aid to reach Syria's people;

:: Taking on extremists on all sides of the conflict;

:: Condemning the use of chemical weapons as unacceptable;

:: Exploring whether the G8 could play a role in stabilising Syria after any change in regime;

:: Supporting a political transition to a new government executive authority in Damascus which can command the consent of the Syrian people.

The PM is understood to want a clear statement of intent in the final summit communique this afternoon.

British officialssaid last night that he was ready to go ahead with a statement with or without Russian agreement - but signals were that Mr Putin was ready to sign up.

Meanwhile, Mr Assad used an interview with a German newspaper to warn that, if European countries agreed to arm the rebels trying to oust him, "Europe's backyard becomes a terrorists' place".

And US officials said Mr Obama would offer a new 300 million USdollar (£190 million) aid package for refugees inside and outside Syria.

Mr Osborne said he believed people would be "impressed" by the commitment achieved today.

"I think we have probably made more progress in the last 24 hours than people have made in at least 24 years," he told the BBC Radio 4 Today programme.

The Chancellor said Britain was consulting on making a register of company ownership public and was "open" to the plan.

He added: "What you will see today is some of the largest countries in the world accepting that we should know who owns what company.

"How that information is available is really going to be partly a matter for those individual countries because they have all got different tax systems and different parliaments and so on.

"What you need at a G8 is the high-level commitment that they all sign up to, the declaration.

"I think what you will see later is we are working on a declaration which I think people will be impressed by because it covers so many of these issues."

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Latest News

Latest Sport

Latest Showbiz