As world leaders gathered in Lough Erne, Northern Ireland, for the start of this week’s UK-chaired G8 summit, Prime Minister David Cameron, has announced that he has signed a deal with Britain’s overseas territories and Crown dependencies, such as Jersey and the Cayman Islands, to clampdown on tax evasion by multinational corporations (MNCs). The topic is also expected to be addressed at the two-day G8 summit this week with moves afoot to increase international cooperation to fight tax evasion, and progress made towards an EU-US free trade deal. Formal discussions about what Cameron, described as the “biggest bilateral trade deal in history” will formally start in Washington next month now that the EU and US have agreed to push for a separate deal, outside of the stalled WTO Doha trade liberalisation talks.
The signing of the anti-tax evasion deal with the heads of UK overseas territories and Crown dependencies, such as the British Virgin Islands and Bermuda – which had been resisting the efforts to restrict the activities of these well-known UK-administered tax havens – was welcomed by campaigners. It is seen as a way to help developing countries gather tax more effectively and to get MNCs to contribute more tax towards each developed nations where they operate. The drive has been sparked by the furore over Apple’s iBond, which avoided repatriating cash for US tax purposes, and the revelation that Starbucks had only paid corporation tax once during its 15 years of operation in the UK.
Melanie Ward, a spokeswoman for the ‘Enough for Everyone’ campaign said to ‘The Guardian’ newspaper when discussing the UK-administered tax haven deal that: “David Cameron has cleared a big obstacles to a clampdown on tax dodging, but a [wider] G8 agreement that will help the world’s poorest is still hanging in the balance.”
The deal to increase the exchange of information and promote tax transparency between UK-administered tax havens and the ‘home’ country and wider international financial markets, followed what British Prime Minister (PM), David Cameron, described to ‘BBC TV’ as “a very good meeting” over the weekend. He hailed the agreement as “a very positive step forward” and is obviously hoping to use it to encourage a similar tax transparency agreement with the developed economies of Japan, US, France, Germany, Italy, Russia and Canada this week at the G8 – such a deal is expected.
It has been revealed, however, that a new register of beneficial ownership which is part of the UK agreement with its tax havens, and details the identity of which corporates have which cash in the tax havens, will not now be open to public scrutiny. The data will only be available to governmental tax authorities for the purposes of fighting terrorist funding, organised crime and tax evasion. This arrangement is what the UK hopes to replicate on the wider international stage at the G8 in order to gain MNC acceptance. Understandably, no corporate would want to share their tax arrangements publicly.
Kofi Annan, the ex-UN secretary general and present chair of the Africa Progress Panel, warned that the “G8 must establish registries on the ownership of companies and trusts in all tax jurisdictions and the registries should be publicly available”, otherwise developing nations in Africa, and elsewhere, will not necessarily be able to track down what tax payments are owed to them.
Tax cooperation has not kept pace with the globalisation of business, and there are now increasing demands for better transparency and harmonisation. The innovations of corporate treasurers, lawyers and tax advisors, which have been pushed towards adopting tax efficiency measures in order to compete with other MNCs, are understandable but they have left nationally-based rival consumer, computer or other firms at a disadvantage as they are left paying taxes in some jurisdictions that MNC competitors are not. Additionally, as austerity measures in Europe bite some citizens are left wondering why they are taking all the pain, while corporates avoid their ‘fair share’ of tax. It’s a debate that is expected to run and run this week, but whether a definitive tax information-sharing G8 agreement can be reached, and implemented, remains to be seen. The final details of any such deal are only likely to be formalised at the next such gathering in Russia, and without the much more important G20 gathering being consulted it is unclear how big an impact a G8 protocol could have anyway.
G8 Summit: Tax and EU-US Free Trade Deal Dominate
David Cameron, the host of the two-day 39th G8 summit running Monday to Tuesday of this week at Lough Erne, near to Enniskillen in Northern Ireland, is also glad that an early agreement has been reached to push for substantive talks towards an EU-US free trade deal. Talks will begin in Washington, US, next month between European Union and US representatives after the G8 leaders agreed to try for a deal. The cross-Atlantic trade liberalisation deal could “add up to £100bn to the EU economy and £85bn to the US”, said Cameron, who is pushing the initiative alongside his moves to introduce better international tax reporting and transparency.
US President, Barack Obama, met with his host PM Cameron and Italian PM Enrico Letta, German Chancellor, Angela Merkel, and the French President, Francois Hollande, before the G8 summit got underway today (on Monday) to discuss the EU-US free trade deal and agree to go for a deal. “The US-EU relationship is the largest in the world,” he said. “We trade about $1trn in goods and services each year, we invest nearly $4trn in each other’s economies and all that supports 10m jobs on each side of the Atlantic. This potentially ground-breaking partnership would deepend those ties.”
Cameron has said the EU/US free trade deal could be worth £10bn ($15.7bn; 11.8bn euros) to the UK alone, adding: “That’s not some abstract statistic, these trade deals matter, because they mean more jobs, more choice for consumers and lower prices.”
Security for the G8 summit in Northern Ireland is as tight as ever for these events with a four-mile long, 3m-high metal fence, having been erected around the Lough Erne golf resort venue. Almost 8,000 police officers have also been deployed to meet a similar number of demonstrators.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
The Danish shipping and oil conglomerate confirmed that it will separate its businesses into stand-alone transport and energy divisions.
The central bank has tweaked its stimulus programme and is making a fresh effort to push Japan’s inflation rate above its 2% target.
A total of US$4.88 trillion of debt has been sold so far this year reports Dealogic, close to the level of 2007 when US$4.91 trillion of bonds were issued over the same period.