The UK has signed an agreement to crack down on tax evasion, along with 50 other countries. The agreement, which was made in Berlin, involves a pledge to pass on financial data freely, limiting the remaining loop holes available to tax dodgers.
A recent catalogue of high-profile tax avoidance cases involving large corporations has sparked renewed support for the need for cross-border tax regulation. Apple, for example, has been found to be paying only 6.4% tax on international profits, with much of its UK trading tax liabilities mitigated through an Irish tax deal.
The agreement, which will involve the automatic exchange of tax information between countries, has been hailed by finance ministers as a collaborative battle against tax dodgers.
Wolfgang Schäuble, German finance minister, said: “We are creating more transparency and more fairness … tax evasion will no longer be worth it.”
George Osborne, UK chancellor, condemned tax evasion as a ‘scourge’ preventable only through a global effort. He also came under pressure at the Berlin meeting to revise the UK’s tax break for patent income, through the so-called ‘patent box’.
He said “Tax evasion is not just illegal, it is immoral. You are robbing from your fellow citizens and should be treated like a common thief.”
Under the agreement, countries will collect and exchange information on bank accounts and the beneficial ownership of companies and other legal structures, such as trusts.
The agreement was drawn up by the Organisation for Economic Cooperation and Development and endorsed by the G20 group of leading countries, as well as being signed by leading offshore centres and other industrialised countries.
Marks Meinzer, a Tax Justice Network analyst, said: “Finance ministers are right to claim historic progress with this landmark agreement for automatic tax information exchange.”