G8 summit to make 'real difference' on tax avoidance

Anti-G8 demonstrators have taken to the streets in London and Belfast in the run-up to the summit

Action will be taken at the G8 summit to make "a real difference" to the amount of tax paid by corporations, David Cameron says.

The PM told Sky News steps to improve sharing of information by countries and to reveal the true owners of companies "will lead to a fairer tax system".

Shadow business secretary Chuka Umunna said existing UK transparency rules were not being enforced.

The G8 summit will begin in County Fermanagh on Monday.

On Saturday, Mr Cameron met leaders of Britain's overseas territories and Crown dependencies and secured agreement from them to sign up to an international initiative against tax avoidance and evasion.

Transparency and trade

The government has also announced plans to require all UK companies by law to register full details of their beneficial owners, including offshore subsidiaries, with Companies House.

The prime minister said every country at the G8 - Canada, France, Germany, Italy, Japan, Russia, the US and UK - would be signing up to an action plan on beneficial ownership.

They would also be discussing ways to better share details between countries about the tax paid by firms in different jurisdictions, he said.

"Those two steps taken together will lead to a fairer tax system where companies pay what they ought to and everyone benefits, both poor countries and rich countries," Mr Cameron said.

He continued: "What we will be doing in Northern Ireland is a very specific set of steps - on ownership, on taxation, on transparency, on trade, that will make a real difference.

"Is it the whole answer? Have we completed the job? Absolutely not, but we will take some big steps down that road which I think can really be welcomed."

'Not victimless'

Mr Umunna told the BBC's Andrew Marr programme he supported the action being taken, but the G8 must address the issue of companies moving their profits between countries in order to reduce their corporation tax bill.

Google, Starbucks and Apple are among a number of companies criticised recently for taking such steps. They say they comply with tax laws.

Mr Umunna also said he had written to the government to find out what they were going to do to ensure Companies House did take action against any firms who failed to comply with the new register.

He said existing rules on reporting overseas subsidiaries were regularly flouted.

"It's no good the prime minister making new announcements about a new register... if you're not actually enforcing the current regime, what hope is there in respect of the future?"

Deputy Prime Minister Nick Clegg told the same programme it would take time to "haul" international tax regimes "into the 21st century", but tax avoidance was "not victimless", particularly in the developing world.

"I was talking to leaders from Ghana, from Senegal, from Guinea and they said, 'Look, we don't really know what tax is owed by the mining and oil and gas companies that are exploiting our natural resources because we can't compare notes with any other jurisdiction'.

"We can do a lot on that and we are making progress."

Mr Clegg was asked whether he had raised the issue of corporation tax avoidance during a recent meeting with Google boss Eric Schmidt at No 10.

He replied: "What he says is, 'Look, you guys make the rules, we'll abide by the rules'.

"The point I made to him was, well, yes, there are the rules, but then there's also public sentiment which is very important, not least for customers of Google, who want to see people playing by the rules, yes, but also playing fairly, and providing the taxes that are due in those areas where they operate and where they make significant profits."