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Tax Haven Weather Forecast: More Sunshine to Come

Posted  September 9, 2016

By Max Voldman

Despite the UK’s  reputation for rain, British legislators are trying expose tax havens to sunshine. The United Kingdom’s House of Commons (Britain’s lower legislative body) unanimously approved a bill that would force multinational corporations to publicly report where they make their money and how much tax they pay (so called country-by-country reporting). If this were to become law, it would be the first of its kind in the world. This was the second attempt to pass such a law this summer. A similar measure was rejected in June in the wake of uncertainty caused by Brexit. The bill now moves to the House of Lords (Britain’s upper legislative body), where a vote is scheduled for September 13th.

This vote comes in the middle of Apple’s well documented tax controversy, and follows the recent European Commission ruling that Ireland offered Apple illegal public aid. Reporting requirements under the new bill would help prevent both tax fraud and tax evasion, as a major hurdle in those fields is that individual countries lack information about conduct and transactions elsewhere in the world, leaving them with insufficient information to properly tax a corporation. This move is similar to a European Commission directive aimed at implementing country-by-country reporting, but with many more specifics and a commitment to make the reports available to the public.

Laws such as this one would be particularly helpful to developing countries that may lack the resources and manpower to conduct expensive and labor intensive investigations. Carolina Flint, a Labour MP and sponsor of the bill, commented on that point, saying that for developing countries a lack of transparency is “one of the major stumbling blocks to their self-sufficiency.”

Tagged in: Tax Fraud,