UK government undermining global effort to end tax avoidance, warn MPs

A cross party parliamentary group on responsible tax has slammed the government for undermining international efforts in tackling tax avoidance by multinational companies like Google, Amazon and Starbucks.

In its report released 4 August, it said that the UK has been two-faced in its approach in ending tax avoidance by large corporations. Margaret Hodge, who chairs the group said: "The government has been facing both ways. While publicly proclaiming their determination to tackle global tax avoidance, they have been encouraging these practices by changes they have made to the UK tax system and by refusing privately to agree to some key OECD proposals."

Dame Margaret described as frustrating the government's failure to make overseas territories and crown dependencies follow Britain's lead in publishing company beneficial ownership registers. The report said the failure to introduce full transparency undermines the OECD's fight against profit shifting.

The report said that although the UK had publicly led work on fighting tax avoidance, it has been undermining these efforts behind the scenes by defending schemes like the patent box relief. Even though the patent box relief has now been amended following concerns raised, it has been copied by other countries, the report noted, according to The Telegraph.

Calls for Theresa May to take a firmer stand

The report said: "The new Prime Minister must put an end to tax secrecy. The UK government should take a leading role and introduce public country-by-country reporting, The UK government should use the law to end the secrecy that encompasses tax havens."

This view is echoed by international charities as well. Oxfam said: "Today's report is a welcome admission by MPs that the world has so far failed to tackle tax dodging."

Christian Aid's spokesperson said: "Every tax scandal leads to promises of a crackdown, but the last government rarely matched words with action ... Theresa May's government must prove it takes this issue seriously by adopting the proposals in today's report in full."

Barry Johnston from ActionAid said: "The new Prime Minister has said she will take on corporate tax avoidance. She'd do well to heed the recommendations of this far-sighted report as the UK redefines its global position."

He added: "This September's G20 meeting in China — May's first major summit as PM — provides the perfect opportunity for her to show she means business."

More global radical reforms needed, UK lawmakers say

The report praised tax experts from the Organisation for Economic Cooperation and Development who had spent two years on the reforms which were published last year.

However, the UK lawmakers are asking for further, more radical reforms. It described the proposal by the OECD as a "sticking plaster" on a global tax system that is "struggling to remain fit for purpose with the growth of multinational companies operating in a digital environment."

The group, found that G20 nations and others were still falling short in the battle against aggressive tax planning by big businesses, The Guardian reports.