EU anti-corruption law welcome but UK must answer ‘difficult’ tax questions

April 10th, 2013

LONDON – Christian Aid gives two cheers today for European moves to tackle corruption by forcing some large companies to come clean about their payments to governments around the world. However, the charity says the UK Government’s failure to push for stronger EU rules means the upcoming G8 will be an acid test of the commitment to tax transparency.

‘Europe has made some extremely important progress towards tackling corruption linked to the world’s mining, gas, oil and logging companies,’ said Joseph Stead, Christian Aid’s Senior Economic Justice Adviser.

‘It did so in the face of frantic efforts by some companies to water down some of the most important parts of the new rules. They wanted various loopholes which would have dramatically reduced the benefits of these anti-corruption reforms.

‘The Directives which the European Parliament and Council agreed in principle last night will provide campaigners, journalists and other citizens with the information they need to hold their governments to account for the money they get from companies exploiting their countries’ natural resources.’

Mr Stead added: ‘These Directives also presented the opportunity to push the envelope on corporate transparency with stronger provisions to tackle tax evasion and avoidance, which currently drains billions of dollars out of developing countries. Unfortunately the UK did not back these measures in the negotiations. This was a missed opportunity.

‘The new rules will not help reveal whether companies are paying the right amount of tax, even though we know that multinational tax dodging is draining billions from countries around the world.’

The European Parliament had called for the new rules to require companies to reveal considerably more information, including data on production, turnover, profits and their number of employees. However, this was rejected by Member States. There was also a call for the new rules to be extended to other sectors, especially banking, telecommunications and construction – but again this call was rejected by member states.

In his speech at Davos earlier this year, the Prime Minister said: ‘If there are difficult questions about whether existing standards are tough enough to tackle avoidance, we need to ask them’. His Cabinet colleagues, including the Chancellor, have backed calls for strong international action to tackle tax dodging, while the Business Secretary, Vince Cable, has voiced his support for full country-by-country reporting.

However, such enthusiasm was not apparent in discussions about the new EU Directives. Mr Stead added: ‘The good news is that the UK can very quickly retake the initiative by taking bold, transformative action at the G8. People at the very top of Government have stated their intention to do this but the time for talking is over. It’s time for doing.

‘Using the UK’s power as G8 chair this year to push for a new international Convention on Tax Transparency would be a good start. Such a Convention could become the beginning of the end for tax haven secrecy, which is currently helping tax dodgers, bribe-takers, money launderers and a host of other criminals across the world.’

The new Directives are expected to get final approval from the European Parliament in June.

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Notes to Editors:

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