In a direct response to the Panama Papers leak that exposed how the world’s richest and most powerful people hide their wealth from tax authorities, Britain and its European allies have announced new rules designed to be a “hammer blow” against tax evasion.
Regulations that will lead to the automatic sharing of information about the true owners of complex shell companies and overseas trusts, George Osborne announced, in partnership with his counterparts from France, Germany, Spain and Italy.
“The rules, agreed this week, were a hammer blow against those that would illegally evade taxes and hide their wealth in the dark corners of the financial system. Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefiting from corruption,” the chancellor said
“Strong words of condemnation are not enough, populist outrage doesn’t by itself collect a single extra pound or dollar in tax or put a single criminal in jail. What we need is international action now, and that’s precisely what we are doing today with real concrete action in the war against tax evasion,” Osborne said while speaking at the spring meetings of the International Monetary Fund in Washington DC.
Britain and other governments were working to shine a spotlight on “those hiding spaces, those dark corners of the global financial system”, he said while referring to the transparency rules on beneficial ownership. The regulations, which will come into effect in January 2017, would be followed up by other countries, Osborne hoped.
The release of the Panama Papers showed that there was no room for complacency in the international effort to crack down on tax evasion, Ángel Gurría, the secretary general of the Organisation for Economic Co-operation and Development said.
As Panama “is one of the few jurisdictions that has pushed against” international measures to improve tax and ownership transparency, the rich and the powerful were using it to evade tax, he said.
“We have to crack down on the professional enablers – lawyers, accountants, financial institutions – that play a key role in maintaining the veil of secrecy,” he said.
Rather than just those that “generate tax consequences”, reports suggest that the finance ministers from other European countries had pushed Britain to extend the new rules to all trusts. Many trusts that are deliberately constructed to avoid such consequences would be excluded, believes the tax transparency campaigners.
Tax evasion and other wrongdoing involving trusts have been repeatedly played down by Britain. They are less familiar in mainland Europe and viewed with suspicion by many tax transparency campaigners even as they are a common feature of UK law.
There was no rift between the UK and France, or any of its other European partners, a spokesman for Osborne said.
Britain is held responsible for its overseas territories, several of which aggressively market corporate secrecy to wealthy companies and individuals around the world believe many world leaders and thus have put the chancellor under pressure in Washington.
When Germany, France, Spain, Italy and Britain published a joint letter announcing further steps on financial transparency, tensions over trusts and foundations were papered over.
(Adapted from theguardian.com)
Categories: Economy & Finance