MPs from across the world take a stand for greater tax transparency

Parliamentarians from around the world committed to take further action in their countries on tax transparency, at the first ever Global Tax Transparency Summit – held in London last week.

Why does this matter for children?

We want every child across the globe to access quality education and healthcare.

That’s why our programmes strive to reach children who are most in need – providing life-saving help and the opportunity to reach their potential.

But our work on the ground is just part of the solution – we also encourage developing country governments to spend more of their domestic income, collected through tax revenue, on public services for the most marginalised children.

Children pay the price for tax avoidance

A recent paper by the International Monetary Fund calculated that developing countries are losing around $200 billion a year to multinational tax avoidance.

This is substantially more than they receive in aid.

So when poor countries are unable to collect the taxes they need, it has a direct impact on the quality and availability of services for children.

Tax havens under UK jurisdiction

Unfortunately these governments face a huge challenge.

All too often, multinational companies hide their tax affairs in tax havens – many of which come under the UK’s jurisdiction.

That is why we strongly welcomed the Global Tax Transparency Summit organised by the UK Parliament’s influential Public Accounts Committee.

Countries must work together

The summit brought together MPs from over 24 countries and jurisdictions to discuss tax transparency, to share their perspectives and to agree next steps for global collaboration.

Throughout the summit, MPs from India, Bangladesh and South Africa told us how difficult it is for them to hold multinational companies to account and to collect their fair share of tax.

The result? MPs from 17 countries signed an open letter urging their governments to take stronger action.

The UK must do more

Yet I heard time and time again – from deeply frustrated MPs – that UK tax havens facilitate corrupt practices in their countries.

Acting alone, they can only do so much.

What is needed is a concerted effort by the UK and it’s jurisdictions to increase transparency.

A good start but more is needed

So where does the UK stand on tax transparency?

In June, the UK created its own public register of beneficial ownership.

This was a big step forward, but without the UK Overseas Territories and Crown Dependencies committing to the same level of transparency, efforts to combat corruption are undermined.

What is Save the Children doing?

Save the Children is currently supporting an amendment to the Criminal Finances Bill to push the government to take a stronger stance on the UK’s Overseas Territories.

Only then will there be the transformational change needed to increase transparency so that developing countries can collect the taxes they need.

Interested? Read more: 

 

 

Leave a Reply

Comments

  • You say

    “Save the Children is currently supporting an amendment to the Criminal Finances Bill to push the government to take a stronger stance on the UK’s Overseas Territories.
    Only then will there be the transformational change needed to increase transparency so that developing countries can collect the taxes they need.”

    But you seem to have ignored India, Bangladesh and South Africa in that statement for they are not UK’s Overseas Territories. I assume that those 3 countries have to have their own tax transparency laws to obtain the tax they should rightly have. Would you please advise whether that is true.
    Thankyou

  • Hi Jim, We want UK multinational companies to report on the profits and tax they pay in every country that they work in. This would mean that authorities in countries like India would be able to make sure that UK multinational companies are paying the tax they should be for their activities in India. It would also allow the UK public to hold UK companies to account. The UK government through the recent Finance Act (referred to this blog: http://blogs.savethechildren.org.uk/2016/09/uk-governments-tax-decision-good-news-children/) gives the government the power to force UK multinational companies to do public country-by-country reporting but this power has not been implemented as yet. Tax authorities in countries like India would also need to have the capacity and expertise to check this reporting done by UK multinational companies is correct.

  • A further question related to your comment above

    “Throughout the summit, MPs from India, Bangladesh and South Africa told us how difficult it is for them to hold multinational companies to account and to collect their fair share of tax.”

    How does a tax transparency law in India make a UK Multinational pay tax in India? I assume the UK Multinational pays tax in the UK, but I cannot see how a UK or Indian tansparency law will make that multinational pay tax in India as well as UK. Or is it you mean an Indian multinational is not paying sufficient tax in India?
    Perhaps you would amplify your statement please.
    Thankyou.

  • Hi Jim, In answer to your second question, We want to see these territories create public registers of beneficial ownership which would say who actually owns those companies (currently this is kept hidden). This would mean that an Indian tax authority could follow the profits and tax of an Indian company that may use a hidden ‘shell company’ in the UK’s British Overseas Territories to make sure it pays the tax it should. The UK now has its own register of beneficial ownership and we would encourage all other countries to publish their own registers.

  • If the Indians for example did have the visibility to see what a UK multinational trades in India, how would the Indians obtain their due tax? Have the Indians passed a law that will ensure that any company trading in their country pays taxes, as George Osborne did for the UK? I am imagining companies like Amazon where the UK tax authorities managed to obtain taxes, but it was because Amazon created a UK based company which then became taxable – perhaps Amazon responded to public pressure which was already reducing their income, and a tax transparency law was not then available. George Osborne’s UK law allowed the UK Government to take Amazon to court if they did not comply.

    So in the Indian case where GDP is lower than it should be, we need India to be able to tax that company for their Indian trade if their GDP is to be increased by the tax transparency law. They need a “George Osborne” law. Have they got one? And if not, we need to help the Indians introduce such a law. Do you agree?
    Thankyou.

  • Further to the above, India (as my example) will perhaps need to threaten these multinational companies if they do not voluntarily comply with the Indian “George Osborne” law. I wonder which law court they would take their case to? We may need our UK Government to provide some cover for this, (by volunteering our UK Courts?) especially if it seems that their registration in the “tax haven” is used by these companies as some sort of legal protective umbrella to avoid paying their due taxes in India. I think the letter to Theresa May that follows the (30,076 so far) petition should mention this additional support these countries need.
    Thankyou.