Nick Shaxson ■ UK government believes in country by country reporting. Or does it?


From an exchange in the UK parliament, via Tax Research, the UK Exchequer Secretary David Gauke:

“A year or so ago I had a meeting at Euston tower with the HMRC [the UK tax authorities] officials who deal with transfer pricing matters. They said it would help them to have a relatively simple form to provide information about the companies into which they enquire so they know where those companies make their profits and where they pay tax. The officials said it would help them to have high-level information that could tell them, for example, that a high proportion of profits were being transferred to a low-tax jurisdiction. They said that type of information would enable them to assess risks and determine where to put their resources. That conversation and others resulted in our proposal for the high-level tool.”

That’s a clear statement from experts in a top tax authority that country by country reporting is a good idea. Of course it is. And that’s going on our quotations page. But the devious fox Gauke added something else, rather less palatable:

“We want to ensure that we have the information that can help HMRC to make risk assessments and know where to focus its efforts. However, we want to do so without in any way compromising our desire not to impose unnecessary burdens on businesses and not to create a whole lot of bureaucracy that does not necessarily help tax authorities much.”

If anyone is looking for a good example of weasel words, those last two sentences should do admirably. CbC reporting is clearly a good idea – but we don’t really want to try too hard. Or, as Tax Research summarises:

“This is the “would you awfully mind giving us a little bit of data, if that’s OK with you, to keep the critics happy, you know” approach to tax collection that is rampant in HMRC.”

And then an admission that the UK government, despite having huffed and puffed about the importance of transparency at the G20, admits that it really doesn’t like it at all. Gauke added:

“The hon. Lady may not have much sympathy with our third point, but the long-standing position of the UK Government—under all parties—is that tax is principally a matter for member states. We have concerns about a tax measure being included in a non-tax directive, thereby undermining the competency of member states in direct tax matters.”

Which is a load of nonsense. CbC reporting is about corporate transparency and accounting, as well as tax. This statement falls squarely in the “unjustifiable excuses” category.

Tax haven UK marches on, under the economic fallacy of tax ‘competitiveness’.

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