THE EU’S five largest economies have banded together to automatically share information on the ultimate owners of companies – the latest move by European powers to tackle offshore tax evasion following the Panama Papers leak.
Chancellor George Osborne announced the news at the annual International Monetary Fund spring meeting in Washington DC, bringing together key EU allies Germany, France, Italy, Spain and the UK to exchange data on company beneficial ownership registers.
The announcement also extends to sharing data on new registers of trusts, a topic that has hit the headlines in the UK following prime minister David Cameron’s connection to Blairmore Holdings, the offshore trust which was named in the Mossack Fonseca data leak.
A global move towards interlinking country registries will provide, for the first time, international real-time access to tax and law enforcement agencies on company ownership.
‘Another hammer blow’ to tax evasion
Sitting alongside Christine Lagarde, managing director of the IMF, and Ángel Gurría, secretary general of the OECD, Osborne labelled the agreement as “another hammer blow” against tax evaders who hide their wealth in the “dark corners of the financial system”. ?
“Britain will work with our major European partners ?to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting ?from corruption,” said Osborne.
“Now it is Britain and our European partners setting the pace on beneficial ownership transparency of not just companies but also trusts with a tax consequence – and I expect that the rest of the world will move to follow our example again.”
— George Osborne (@George_Osborne) April 14, 2016
Tax authorities have been working around the clock to respond to public concern following the Panama Papers leak, with David Cameron announcing this week the creation of a joint taskforce to investigate the financial affairs of companies mentioned in the Panama Papers.
Cameron also announced that the UK is to bring forward plans to introduce a new criminal offence for corporations that fail to take adequate steps to prevent the facilitation of tax evasion.
This is not the first time an international deal on tax transparency has been agreed. In 2013, David Cameron committed Britain to a register of beneficial ownership during the British chairmanship of the G8 group of leading industrialised nations.
The five countries will now push for the rest of the G20 nations to share information on owners of companies, which include nations such as Saudi Arabia, China and the United States.
Chas Roy-Chowdhury, head of taxation at the ACCA, said it will be interesting to see if the US “play ball and provide reciprocal information” to the five countries.
“This is good news for the honest tax payer who will have nothing to fear and will help public finances. The information exchange should be kept within tax authorities and delivered in a timely fashion by each,” continued Chowdhury.
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Signed into law by president Barack Obama in 2010, the Dodd-Frank legislation has tightened regulation of the US financial system
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