Prime Minister David Cameron has thrown down the gauntlet to British tax haven dependencies warning them to get their ‘house in order’ ahead of a crucial G8 summit.
The leaders of the world’s richest eight nations are meeting in Northern Ireland and Mr Cameron says his ambition for greater tax transparency around the world is being undermined by the antics of the tax havens.
He has now written to 10 territories and crown dependencies which operate low tax regimes and hands-off regulation saying they must enforce tax regulations.
Mr Cameron says they must also sign up to international tax treaties, much like the American legislation called the Foreign Account Tax Compliance Act (FATCA), to increase transparency.
The dependencies being targeted are the Isle of Man, Guernsey and Jersey, Gibraltar, Bermuda, the Cayman Islands, the British Virgin Islands as well as Montserrat, Anguilla and the Turks and Caicos Islands.
Low tax jurisdictions
In his letter, Mr Cameron tells the governing authorities that it is ‘crucial that we get our houses in order’ ahead of the G8 summit.
Mr Cameron has made clear his intention to support international efforts to bring in tighter tax measures and it appears that he will use his position as host of the summit to call for tougher rules on unearthing tax dodgers.
While pushing for action on an international level to tackle tax avoidance schemes, Mr Cameron says he respects the dependencies right to be low tax jurisdictions – but they must collect what is owed in taxes.
He warns, also, that any rules should be enforced fairly.
Previously the UK government has criticised several of the tax havens for having complex tax arrangements which attract international businesses and help them hide their true profits.
This issue has been highlighted recently by news that major firms, including Google and Apple, are hiding billions of pounds worth of income in the havens and not paying a fair share of tax.
Now Mr Cameron wants greater tax transparency and for greater sharing of tax information between countries.
He wrote that the UK government wanted to know who really owns and controls each and every company registered in the havens.
The UK government wants action across the board in a bid to stop one jurisdiction bringing in tougher controls to prevent companies moving to another jurisdiction to keep their accounts secret.
Mr Cameron says he welcomes the commitments already given by the territories to hand over tax information but, he says, there needs to be an improvement on the quality and accuracy of what is being handed over.