Cameron urges global action against tax avoidance

David Cameron will step up the campaign against tax evasion and “aggressive” tax avoidance as Apple joins multinational corporations in the spotlight.

A day after Ireland defended itself against claims that its corporate tax regime has helped Apple legitimately reduce its tax liability by billions, the Prime Minister is urging the rest of the EU to back global action against what he has described as “staggering” losses to national exchequers.

The issue is on the latest EU summit agenda at the request of the UK, France and Germany, and European progress would boost next month’s G8 gathering in Lough Erne, Northern Ireland, which host Mr Cameron will use to press the case against international tax secrecy and for an end to tax havens.

In a letter to fellow EU leaders Mr Cameron has urged European governments to join forces to act against “staggering” losses from tax evasion and “aggressive avoidance” by adopting a US system of cross-border tax information exchange – something the UK, Germany, France, Spain and Italy are jointly testing and intend to implement by the end of this year.

Two days ago the Prime Minister wrote to UK overseas territories and crown dependencies telling them he expects them to take action on tax transparency.

As well as moves towards establishing a new global standard for “multilateral automatic information exchange”, Mr Cameron wants the EU and G8 meetings to extend country-by-country reporting by companies on where they pay tax.

But the risk is that some EU countries will want to set up their own, separate, system rather than adopt the emerging international blueprint for tightening controls on large-scale tax avoidance schemes estimated to cost the European Union alone one trillion euros a year.

Finance ministers from 17 EU countries including Britain and Ireland have already signed a declaration backing the global system, but 11 have not and long-standing opposition has been driven by Luxembourg and Austria, where banking secrecy is traditionally sacred.

On the eve of the summit Ireland rejected US Senate suggestions that Dublin’s tax system was responsible for Apple’s ability to its slash its tax bills by holding profits in Irish subsidiaries.

But the timing of an appearance by Apple CEO Tim Cook at a Senate tax hearing in Washington, bolstered Mr Cameron’s case that loopholes need closing – action requiring global agreement to be effective.

After the four-hour Brussels summit, which will also discuss energy policy, Mr Cameron will travel to Paris for talks over dinner at the Elysee Place with French president Francois Hollande – a rendezvous postponed in April because of the death of former prime minister Margaret Thatcher.

The two men are already co-operating closely at EU level on tax evasion and avoidance, working jointly on breaking down the walls of corporate secrecy about who owns which companies and where they are based.

Over dinner they are expected to discuss the future of the Anglo-French relationship, foreign policy including the crisis in Syria and, inevitably, the latest twists and turns in the Tory party’s infighting over Britain’s EU role and an a possible in-out referendum.

Asked about the UK situation in Europe during a press conference last week, Mr Hollande said he hoped the UK would stay in the club, but observed that “Europe existed before Britain joined it”.

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