Chancellor George Osborne today (Thursday 14 April) unveiled a ground-breaking international deal to automatically share information on the ultimate owners of companies with key EU allies, making it more difficult for firms to dodge tax or funnel corrupt funds.
Britain has initiated an agreement with Germany, France, Italy and Spain that will see tax and law enforcement agencies from the five countries exchange data on company beneficial ownership registers and new registers of trusts, allowing for more effective investigation of financial wrongdoing.
The Chancellor has also written to G20 counterparts, along with Finance Ministers from Germany, France, Italy and Spain, urging progress towards a fully global exchange of beneficial ownership information in order to remove ‘the veil of secrecy under which criminals operate’.
A global move towards interlinking country registries will provide, for the first time, international real-time access to tax and law enforcement agencies on company ownership.
The new agreement, unveiled at the spring meetings of the International Monetary Fund in Washington, D.C., builds on Britain’s leading international role on tax transparency. Prime Minister, David Cameron committed Britain to a register of beneficial ownership during the British chairmanship of the G8 group of leading industrialised nations in 2013.
The Chancellor George Osborne said:
Today we deal another hammer blow against those who hide their illegal tax evasion in the dark corners of the financial system.
Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting from corruption.
It was Britain that led the world in pushing for the automatic exchange of personal tax data and encouraged the OECD to develop new rules for taxing multinationals more fairly.
Since the dozens of other countries have followed our example.
Now it is Britain and our European partners setting the pace on beneficial ownership transparency of not just companies but also trusts with a tax consequence - and I expect that the rest of the world will move to follow our example again.
It shows the benefit of working together. No single country can tackle international tax evasion alone - and Britain should never fool itself into thinking that it can do this by itself.
The European pilot will begin to explore the best way for countries to share this information, with a view to developing a truly global common standard in a two-step process leading to the interlinking of national registries.
The letter to G20 Finance Ministers, suggests that the OECD, alongside the Financial Action Task Force should take a lead role in developing new single global standard for such exchange and for the interlinking of registers.
A global exchange of beneficial ownership information will compound the effectiveness of the Common Reporting Standard (CRS) which was launched as a result of the UK’s G8 presidency.
The CRS will see more than 90 countries, including Overseas Territories and the Crown Dependencies, automatically exchange taxpayer financial account information, giving HMRC access to the data of accounts held by UK taxpayers in these jurisdictions.
The UK is already set to receive this information from its Overseas Territories and the Crown Dependencies in 2016, one year earlier than the rest of the world.
From June 2016, the UK is the first major country to have a register of company beneficial ownership in place. It has also decided to make the information public, and it will be free for anyone to access.
These latest actions build on strong action the government has taken since 2010 to revolutionise tax transparency and tackle tax avoidance and evasion. In this Parliament alone the government will legislate for over 25 measures to make sure people do not get out of taxes due, together raising £16 billion by 2021.