David Cameron to warn EU summit over tax

BBC: David Cameron is to urge EU leaders to back global action against tax evasion and "aggressive" tax avoidance that is causing nations "staggering" losses.

The prime minister will meet his European counterparts in Brussels later to discuss ways of cracking down on those who do not pay their fair share.

He will also raise the issue at June's G8 summit in Northern Ireland.

Meanwhile, Labour leader Ed Miliband will criticise Google tax arrangements at an event organised by the firm.

The taxation issue is on the agenda of the latest EU summit - which will also discuss energy policy - at the request of the UK, France and Germany.

Mr Cameron has written to EU leaders ahead of the meeting urging a US-style cross-border tax information exchange.

The UK, Germany, France, Spain and Italy are currently testing such a system and want to launch it by the end of the year.

Mr Cameron also wants G8 and EU meetings to include country-by-country reporting of where companies pay their tax.

'Extraordinary lengths'

After the four-hour summit, Mr Cameron will travel to Paris to meet French President Francois Hollande at the Elysee Palace where co-operation on tax evasion and avoidance as well as tackling corporate secrecy will again be on the agenda.

The meetings come two days after Mr Cameron wrote to 10 British overseas territories and crown dependencies, including the Cayman Islands and the Isle of Man, urging them to "get their house in order" and sign up to international treaties on tax.

Critics claim such places, which operate low-tax regimes, are used by companies for tax avoidance or evasion.

 

Tax avoidance, where companies operate within the rules to avoid paying taxes, and tax evasion, which is outside the law, have risen high on the political agenda in recent months.

High-profile companies like Google, Amazon and Starbucks have faced criticism in the UK for the low levels of tax they appear to pay compared with the size of their businesses.

In the US, Apple chief executive Tim Cook has been defending the technology giant to a US Senate committee against accusations that it has avoided paying tax on tens of billions of dollars in profits.

Ed Miliband, meanwhile, is expected to accuse Google later of going to "extraordinary lengths" to avoid making payments to the Treasury.

The company's UK sales are worth £3.2bn, but most are routed through Ireland, meaning it paid £6m in corporation tax in 2011.

The company's executive chairman Eric Schmidt has insisted the company "has always aspired to do the right thing", adding that "international tax law could almost certainly benefit from reform".

Mr Miliband, speaking at the Google Big Tent event in Hertfordshire, will say: "I can't be the only person here who feels disappointed that such a great company as Google, with such great founding principles, would be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds of revenue in Britain, but pays just a fraction of that in tax.

 

"So when Google does great things for the world, as it does, I applaud you. And when Google goes to extraordinary lengths to avoid paying its taxes, I think it's wrong."

Mr Miliband's speech and the EU summit come on the same day that an Oxfam report is published suggesting people using tax havens are depriving the world of more than £100bn in lost revenue - enough to end extreme poverty twice over.

Oxfam said that figure only included tax dodged by individuals and not companies.

And more than a third of the £12tn held in tax havens around the globe was believed to be held in British overseas territories and crown dependencies, the charity estimated.

"Talking tough on tax whilst continuing to usher a third of the world's wealth into UK tax havens, risks making a mockery of David Cameron's leadership at the G8 Summit in June," Oxfam head of development finance and public services Emma Seery said.