Paymaster general Dawn Primarolo made the objective clear as she flatly rejected demands for a rethink over curbs on using offshore mixer companies to shelter low-tax foreign profits from UK tax.
Primarolo was responding to repeated protests during a Commons debate on the Finance Bill.
Shadow chief secretary David Heathcoat-Amory, an accountant, contrasted Government claims that additional revenue will amount to £300m with industry forecasts that the cost will be counted in billions.
He said: ‘Perhaps the small additional revenue is because the companies concerned will leave the country.’
Former Tory Treasury minister Michael Jack warned: ‘The competitive position of UK companies trading on a world basis has been put at risk by the proposal.’
He said the effect was to change the qualifying arrangements for non-controlled foreign companies, which currently enable them to take advantage of the different taxation regimes throughout the world in mixing their incomes.
And he claimed it will make it more difficult for them to remain competitive.
But Primarolo said: ‘The use of mixer companies has made UK investors more or less indifferent to the high tax rates in countries in which they invest, and we need to change that focus to ensure that we receive the correct amount of tax.
‘The fundamental point is that the Government do not believe that companies should be able to roll up profits offshore, in many cases out of the reach of any normal tax system.
‘This is not about competitiveness, but about fairness.’
Primarolo said the new regime will limit the use of mixer companies to mix rates as high as 60% with those as low as five per cent when repatriating profits to the UK as dividends.
She complained: ‘That means that the Exchequer underwrites the cost to business of investing in countries that have not reduced their taxes to the UK level.’
She claimed companies had been attracted to the UK by economic stability, low corporate tax rates and the abolition of advance corporation tax, making Britain attractive for companies with activities outside the UK, and that climate would persist.MPs demand more consultation on double tax changes
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