G8 Turn The Screw On Offshore Companies

G8 Turn The Screw On Offshore Companies

G8 Turn The Screw On Offshore CompaniesThe world’s leading industrial nations move a stepped nearer a global tax network by agreeing a tax register to stop companies and wealthy investors from masking their income with the help of offshore companies.

Britain’s Companies House is tasked with setting up an international database of companies in offshore financial centres that will reveal who owns the shares – and the profits from any dealings by the company.

The aim is to shine a light on the true earnings of multinational corporations and wealthy individuals so tax authorities can see how the money comes and goes.

“This move changes how the world looks at tax transparency and heralds an end to corporations and the wealthy shuffling their money around the world to find the place where they can pay the least tax,” said Osborne.

“It’s fair to say that more progress has been accomplished in one day than in more than two decades of discussing this.”

No hint about offshore trusts

One of the main fillips making the agreement work was Britain bringing Crown Dependencies and Territories sheltering offshore companies into line.

Tax authorities believe around 20% of the world’s offshore secrets are hosted in these so-called havens, like the Cayman Islands, Bermuda, Guernsey and Gibraltar.

Companies House will run a register of corporate beneficial owners – the people who control an offshore company’s money and offshore companies will be compelled to make the information available and up-to-date.

However, the G8 communique expressly talks about offshore companies and omits trusts and whether they will have to sign up to the register.

“It’s about the time tax rules were updated for the 21st century,” said Osborne. “The G8 want big companies to pay tax where their profits are made, not where the paperwork is administered.”

Tax loopholes

He argued that if a company in Britain sold goods to a customer here, then tax on any profits relating to that sale should be paid here, not whisked off to a tax friendly jurisdiction with laxer tax and company ownership rules.

“Someone knows who owns a company – and that’s the person in charge of the money,” he added. “Many companies in offshore countries have directors who do what they are told and keep the real owners and their financial activities secret.”

Osborne also said wealthy individuals with assets offshore would also be targeted by the plan to make tax more transparent and pledged loopholes in the global financial network would be plugged.

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