As EU finance ministers meet, Labour MEPs tell Osborne: “We need plain speaking on tax, not Double Dutch”
Ahead of today’s informal gathering of European Union finance ministers, Labour MEPs have called on George Osborne to show leadership and work with his counterparts to secure backing for substantive measures to tackle tax avoidance.
Anneliese Dodds MEP, Labour’s European Parliament spokesperson on taxation, has written to the chancellor, urging him to push for fully public registers of beneficial ownership for all companies and trusts; new rules on country-by-country reporting to apply to a much broader range of companies; and for multinational companies to be made to report on where they make their money and where they pay their taxes for every single country in the world.
Yesterday, EU justice commissioner Věra Jourová, who is in charge of corporate transparency, said she was exploring ways to toughen existing rules aimed at forcing trusts and companies to disclose their true owners.
The rules, agreed last year, require EU countries to set up registers disclosing “beneficial ownership”, however the legislation includes carve outs for trusts from important parts of the rules – a loophole the UK government had pushed for. In some cases, companies are not required to register their true ownership at all.
Ms Dodds tells Mr Osborne:
“So far, your government has largely lobbied against EU measures to tackle tax dodging. In Brussels you lobbied to stop secretive trusts being exposed to the sunlight of full transparency. And your comment last week that new EU proposals for public country-by-country reporting were “a step in the right direction” rang rather hollow after Conservative MEPs voted against such proposals no less than four times last year.
“However, in the words of the West Wing’s Sam Seaborn: let’s forget about the fact that you’re coming a little late to the party, and embrace the idea you showed up at all. I want to make this easy for you, George, so that you don’t end up promising something that you then have to ask your Tory MEPs to block when no-one’s looking.
“I am asking you, on Friday, to secure the following measures: Fully public registers of beneficial ownership for all companies and trusts: Your promise to allow access to these registers to a few tax authorities tackles only the tip of the iceberg. The registers need to be completely public. And they should not just be compulsory for the UK mainland, but also for all of the Overseas Territories and Crown Dependencies.
“New rules on country-by-country reporting must apply to a much broader range of companies: Right now, the rules will only apply to companies with a turnover of more than €750 million (£590m). That’s far too high a threshold, and would miss up to nine out of ten multinationals. If you mean what you say, you should call for that threshold to be reduced to €40m (£31m), in line with the EU Accounting Directive.
“Multinational companies must report on where they make their money and where they pay their taxes for every single country in the world: Current proposals – for the figures only to be broken down by the 28 EU countries and a handful of the very worst tax havens – are simply not good enough. We need to know exactly where the world’s largest companies are operating, to make sure that taxes are paid where profits are made.
“In the Netherlands this week you have the opportunity, and the responsibility, to show some genuine leadership on tax, rather than saying one thing when the cameras are on and doing another the minute they’re switched off. We need plain speaking on tax, not Double Dutch.”