Spotlight to shine on secret firms
Lifting the "cloak of secrecy" around the true ownership of shadowy shell companies will help combat corruption and ensure taxes are properly paid, David Cameron has said.
The Prime Minister announced that a UK register of the beneficial ownership of companies would be made public, shining a spotlight on international cash flows.
Mr Cameron, who made tax transparency a key theme of the G8 summit in Northern Ireland, urged other world leaders to build on the commitments made at Lough Erne.
He promised a "relentless" pursuit of businesses which break the rules and said that by making the register public it will be easier for firms and developing countries to see who they are really dealing with.
Speaking at the Open Government Partnership summit in London, he said: "For too long a small minority have hidden their business dealings behind a complicated web of shell companies - and this cloak of secrecy has fuelled all manner of questionable practices and downright illegality.
"Illegality that is bad for the developing world - as corrupt regimes stash their money abroad under different identities. And illegality that is bad for Britain's economy too - as people evade their taxes through untraceable trails of paperwork.
"Not only is this hugely unfair to the millions of hard-working people in Britain who pay their tax, but it's also bad for business. To keep corporate taxes low, you've got to keep corporate taxes coming in. As I've put it, no tax base - no low tax case.
"So that's why we need to shine a spotlight on who owns what and where money is really flowing.
"This summer at the G8 we committed to do just that - to establish a central register of company beneficial ownership. And today I'm delighted to announce that not only is that register going to go ahead, but that it's also going to be open to the public."
The decision to make the UK register publicly accessible has been welcomed by campaigners and business leaders.
Mr Cameron said that while the compilation of the register would enable the Government to pursue those who broke the rules, making it public would have many wider benefits.
"It's better for businesses here - who will be able to better identify who really owns the companies they're trading with. It's better for developing countries - who will have easy access to all this data without submitting endless requests for each line of inquiry. And it's better for us all to have an open system which everyone has access to - the more eyes that look at this information, the more accurate it will be," he said.
Poverty campaign group One said it was a "really important moment in the fight against corruption".
One's Europe executive director Adrian Lovett said: "Making information about who owns and controls companies publicly available will give citizens and journalists in developing countries access to the data they need to follow the money and root out corruption."
Chris Bain, director of aid charity Cafod, said: "It is both the right thing to do as it will support the global fight against money laundering and tax evasion, and also shows that the Government has listened to public opinion.
"Above all it will be vital for our international partners in their fight to prevent resources intended for poverty eradication being siphoned off."
Roger Barker, director of corporate governance and professional standards at the Institute of Directors, said: "From a governance perspective, it is right that the true owners of companies should be transparent both to the company itself and the wider business community.
"Using the corporate veil to obscure underlying ownership brings the corporate sector into disrepute and creates significant opportunities for wrongdoing or criminal activity."
For Labour, shadow treasury minister Shabana Mahmood said Mr Cameron "needs to go much further to tackle tax avoidance".
"With the amount of uncollected tax rising in the last year to £35 billion, it's clear this Government is failing. David Cameron needs to explain why he decided not to close down the eurobonds tax loophole and why his Swiss tax deal has raised a fraction of the money promised," she said.