George Osborne has now combined forces with the German finance minister, Wolfgang Schäuble, to declare an international crackdown on tax avoidance by large companies.
Following the meeting of the G20 finance ministers in Mexico, George Osborne had pleaded for “concerted international co-operation to strengthen international tax standards that at the minute may mean international companies can pay less tax than they would otherwise owe”.
While none of the ministers gave any names regarding which corporations they will battle, it was said that globalisation and technological improvements have ensured governments were unable to keep up with the fast-paced, changing nature of business, which has led to many organisations avoiding paying tax.
The two finance ministers have said they will look into which loopholes need urgently closing as a first step in ensuring that profit-shifting is better dealt with on the global level.
After the meeting, Osborne said: “We want competitive taxes that say Britain is open for business and that attract global companies to invest in and bring jobs to our country, but we also want global companies to pay those taxes. The best way to achieve that is through international action that ensures strong standards, without pricing ourselves out of the global market.“
The statement, which was written by both the British and German finance ministers, reads that “international tax standards have had difficulty keeping up with changes in global business practices, such as the development of e-commerce in commercial activities”.
The statement follows by saying: “As a result, some multinational businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated, thus minimising their tax payments compared to smaller, less international companies.”
Due to growing grievances from the general public regarding tax avoidance by big corporations, the government has decided it is finally time to push to resolve this issue.