David Cameron aims to eliminate tax evasion by foreign companies operating in the UK using a series of strict new tax transparency guidelines. Multiple tax scandals are dominating the news in 2013, including issues with technology firms like Apple and Google, as well as well-known online retailer Amazon.com.
The Prime Minister announced that thousands of shell companies registered in the UK to foreign owners would be added to a central register that catalogues their true ownership. The registry is aimed at reducing tax avoidance from major companies, many of which route their UK-based income through foreign territories to avoid tax.
The scheme has come under criticism from business leaders, who claim that there’s a key difference between tax evasion and legal tax avoidance. It’s also received some praise from business leaders, who welcome a simpler tax system. During a business event, the Prime Minister remarked that Britain’s corporate taxes would be revised.
Recent steps from foreign bodies already indicate that they aim to work with the UK to reduce aggressive tax evasion. Ten British foreign territories have signed up to an international deal aimed at reducing secrecy over the ownership of companies. Self-governing regions are a popular choice for British firms looking to avoid taxes.
Territories planning to enter the agreement include Bermuda, Gibraltar, the Isle of Man, and many others. The agreement also targets the Cayman Islands – one of the largest offshore financial hotspots for British companies. The deal will allow many of Britain’s overseas territories to share information on account holders.
David Cameron has called the deal a ‘very positive step forward’ for reducing tax avoidance from UK-based companies. Analysts expect that the deal will be a useful victory for the Prime Minister, who plans on debating new tax legislation with the other G8 leaders in Northern Ireland later this month.
