Cameron calls on tax havens to clean up their act
Prime minister David Cameron has written a letter to British overseas territories urging them to come to London for a conference to tackle the tax evasion industry.
At the tax and transparency conference, to be held the weekend before Mr Cameron hosts the G8 summit in Northern Ireland, the prime minister will ask overseas territories including Bermuda, Jersey and the Cayman Islands to sign the Organisation for Economic Cooperation and Development (OECD) Multilateral Convention on Mutual Assistance in Tax Matters, requiring them to share information between countries.
Many of the overseas territories have already agreed to the exchange of information with some western economies, but the applicable information is not as wide as prescribed by the convention.
Whether or not the convention will be signed at the conference is by no means certain. Many of the overseas territories are angry at being labelled tax havens, fearing the effects this may have on their economies. Moreover, the constitutional relationship between the UK government and these territories remains uncertain.
Mr Cameron would also like to use the conference to tackle beneficial ownership. He has urged overseas territories to publish action plans containing full and accurate details of the ownership and control of every company.
The letter represents Mr Cameron’s attempt to put his own house in order before the G8 summit on 15th June where he wants to focus on tax, transparency and trade, with tax evasion and aggressive tax avoidance a top priority.
The recent tax avoidance scandals and investigations relating to large multinational companies such as Google, Apple and Starbucks have made David Cameron’s commitment to tackling tax evasion ever more relevant.
Furthermore, such scandals have increased support for his stance across the western world where domestic economies continue to be squeezed and public anger at the banks and the multinationals remains high.
How far Mr Cameron will be able to push the G8 into implementing significant changes remains unclear, with the US and Canada harbouring hostility towards extreme measures and business voicing concerns over the effects of excessive regulatory burdens.
Melanie Ward, head of advocacy at Action Aid UK, said: “It is perfectly possible to achieve a G8 tax deal to tackle tax dodging that works in the interests of rich and poor countries alike. The prime minister has said that he will do this, but the question is whether he has the clout to achieve it.”