Britain yesterday called upon its overseas territories to “get their house in order” over the sharing of tax information, as the UK looks to lead a global fight against tax evasion ahead of a meeting of the world’s wealthiest states.
Britain is using its presidency of the G8, which holds its annual summit on June 17 and June 18, to push for a global clampdown on complex arrangements used to disguise wealth and minimize tax payments.
British Prime Minister David Cameron wrote to leaders of the UK’s offshore territories and other self-governing regions, urging them to sign up to international protocols on information exchange and improve their transparency.
“With one month to go, this is the critical moment to get our own houses in order,” Cameron said. “I respect your right to be lower tax jurisdictions ... but lower taxes are only sustainable if what is owed is actually paid.”
The Cayman Islands, British Virgin Islands and other British overseas territories have become major international financial centers thanks to low taxation, light-touch regulation and limited requirements for those who invest there to disclose information about their affairs.
Big businesses say they use such jurisdictions to help avoid double taxation on international trade, but critics say the territories help companies to avoid paying tax on their profits and to facilitate money laundering and tax evasion on the part of rich individuals.
Some of the 10 countries that received the letter were identified by British tax authorities this month as home to complex tax arrangements.
The British prime minister asked all the letter’s recipients to sign up to the Multilateral Convention on Mutual Assistance — a protocol developed by the Council of Europe and the Organisation for Economic Co-operation and Development that facilitates cooperation between states on tax matters.
In addition, Cameron said the territories needed to produce an action plan on how to improve their transparency with respect to ownership of assets and companies.
“Put simply, that means we need to know who really owns and controls each and every company,” he said.
Such steps would make the territories less attractive locations for hiding stolen assets or evading taxes, but are unlikely to affect the kind of shifting of corporate profits that has angered British lawmakers and the public, since this rarely involves hiding beneficial ownership.
Early this month, Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands joined the Caymans and Gibraltar in agreeing to provide Britain, France, Germany, Italy and Spain with details of bank accounts held by their citizens in the territories.
The territories receiving the letter were Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.