The Committee issued its warning in a report based on research by campaigning charity ActionAid, which aims to end world poverty. According to ActionAid, the UK will deprive developing countries of up to £4bn in tax revenues if British-owned multinational companies are encouraged to shift profits into offshore havens. And the changes will also cost the UK almost £1bn in lost revenue.
The Government proposed a relaxation of its CFC rules in the 2012 Finance Bill. The rules have applied to British-owned companies operating either in the UK or overseas and were designed to discourage UK-owned corporations from using tax havens.
Currently, if a UK-owned company reports profits in a country with lower corporate taxes than the UK, the government is able to impose an extra tax charge on the company to "make up the difference", meaning that profits moved from developing countries into tax havens still incur tax at UK rates.
However, under the new rules, due to come into force in January, the UK will only impose this extra levy if the profits have been shifted from the UK. Profits moved from developing countries into tax havens will incur tax at the tax-haven rate, rather than the UK rate, so the incentive to shift profits will be much higher.
Charities and NGOs, oppose the relaxation, arguing that the cost to developing nations is too high, although the Treasury does not accept the £4bn loss estimate.
But Malcolm Bruce, Chairman of the Committee said: We do not know if this estimate is correct, but the government cannot legitimately refute the £4bn figure unless it is prepared to conduct its own analysis. That is what we are urging it to do."
For more information, please visit www.milsted-langdon.co.uk
[ add comment ] ( 105 views ) | permalink
Search
