October 31, 2013
Rowan Williams, the former archbishop of Canterbury, rarely seems a natural ally of David Cameron‘s. But yesterday Dr Williams, who now chairs Christian Aid, was warmly enthusiastic about the prime minister’s decision to demand that all UK-registered companies list their beneficial owners, and introduce an open-access register of the information. On one level it reads like a small technical change to the myriad complex rules that govern company tax law. But to campaigners, it’s the first step in ending one of the big dodges that deplete both developed and developing country reserves. [EXPAND Read more]
There are some eye-catching examples of what the truly enterprising can get up to: take Sweet Pink or Beautiful Vision, both allegedly vehicles for a whopping dodge perpetrated by Teodoro Nguema Obiang, son of the president of Equatorial Guinea, which enabled him to buy a Californian beachside mansion and a private jet. Rather more mundanely, the public accounts committee’s chair, Margaret Hodge, pointed out earlier this week that nearly a third of companies registered in this country weren’t required to file a corporation tax return: some people believe policing of returns is so lax that it could be as many as half. Even HMRC estimates that it lets £35bn – 2% of GDP – slip through its fingers each year. The loophole that Mr Cameron announced he was closing spells the end of one popular wheeze: setting up a shell or phantom company to disguise actual ownership. No traceable beneficial owner means no tax bill. This matters in the UK – as Mr Cameron pointed out in a speech to the Open Government Partnership Summit, the more tax goes uncollected, the more the rest of us have to pay – but it may matter even more to developing countries which struggle to track down taxes due from their own citizens who are sheltering behind UK-registered phantom companies. Now every holder of more than 25% of the shares of any company will be named. As importantly, the register will be open to scrutiny. It will be, to cheers from the Tax Justice Network, a crowd-sourced inspection regime.
Tax experts still have reservations. The Labour MP Michael Meacher has legislation in the pipeline – MPs debate it again today – itemising the more detailed reforms campaigners believe are needed to make the change stick. And at the G20 in St Petersburg last month, it was acknowledged that transparency had to be a global effort if the dodgers were not simply to move to a different tax regime. Observers are concerned that the emphasis was all on the richest countries when developing countries suffer disproportionately from the way international business exploits secrecy. But for all the caveats, it is an important step. Two cheers, Mr Cameron. [/EXPAND]