New British tax law won't stop corporate avoidance - parliamentarians

LONDON Wed Mar 13, 2013 10:32am GMT

1 of 2. A bus and taxi pass Big Ben on Westminster Bridge in London March 10, 2012.

Credit: Reuters/Kieran Doherty

Related Topics

LONDON (Reuters) - Legislation on tax avoidance going through Britain's parliament will not address the kinds of corporate tax minimisation that are of the greatest concern to the public, a parliamentary committee said on Wednesday.

The "General Anti-Abuse Rule" (GAAR), part of a wider finance bill, would grant Her Majesty's Revenue & Customs additional powers to counter "abusive" tax avoidance

But a sub-committee in the Lords examining the bill said GAAR would not tackle the practices used by companies such as Amazon and Starbucks to reduce their tax bill.

A Reuters report on coffee chain Starbucks last year revealed the company had paid minimal tax over a 14-year period, prompting criticism from politicians, protests at stores and boycotts by customers.

Online retailer Amazon has been criticised for channelling its European profits via an untaxed Luxembourg entity.

Tax campaigners have criticised what they see as a watering down of the draft GAAR legislation, which was initially planned to tackle "aggressive" tax avoidance, something that later became "abusive" tax avoidance.

The actions of Starbucks and Amazon - which say they file all the appropriate taxes in every country in which they operate - would likely not be deemed abusive under the proposed legislation because they take advantage of arrangements allowed by international tax rules to shift profits.

The government says while it wants businesses to pay their fair share of taxes, it is also keen that Britain should have the most business-friendly tax system in the G20.

The sub-committee agreed that the narrow focus of the GAAR was the best approach to avoid uncertainty for business.

The sub-committee said in a statement that the GAAR should be independently reviewed after five years to "ensure that it is working properly and having the appropriate deterrent effect."

It also called for an acceleration of an international review, being led by the Organisation of Economic Co-operation and Development, of how multinational companies are taxed.

The sub-committee added that separate plans, also due to be included in the finance act, to introduce a tax on residential properties worth over 2 million pounds owned by corporations - a device often used by individuals to avoid stamp duty and capital gains taxes - was excessively complex and potentially unworkable.

(Reporting by Tom Bergin; Editing by Robin Pomeroy)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (2)
carlostheba wrote:
“The government says while it wants businesses to pay their fair share of taxes, it is also keen that Britain should have the most business-friendly tax system in the G20.”
A logical paradox if there ever was one. I don’t want to lose any more water but I don’t want to be seen fixing the leak.

Mar 13, 2013 10:08am GMT  --  Report as abuse
GlobalFamily21 wrote:
In every respect the Government is supporting the Rich than the Poor. They close their eyes in front of corporate cheatings and unscientific and monopolistic pricings being adopted by the corporate giants. They support the millioners’ by taking as much money from the bottom level by means of maximum taxes, NI contributions, council taxes, travel expenses, fees and ever increasing utility bills. I wonder what is the philosophy of the Government? Justice should be done by allowing the flow of money from the higher income group including the corporate sector to the lower income group-the suffering masses.

Mar 13, 2013 7:47pm GMT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.