LONDON (Reuters) - Britain called upon its overseas territories to “get their house in order” over the sharing of tax information on Monday as the UK looks to lead a global fight against tax evasion ahead of a meeting of the world’s wealthiest states.
Britain is using its presidency of the Group of Eight (G8) leading economies, which holds its annual summit on June 17-18, to push for a global clampdown on complex arrangements used to disguise wealth and minimise tax payments.
Prime Minister David Cameron wrote to leaders of Britain’s offshore territories and other self-governing regions, urging them to sign up to international protocols on information exchange, and improve their transparency.
“With one month to go, this is the critical moment to get our own houses in order,” Cameron said. “I respect your right to be lower tax jurisdictions ... But lower taxes are only sustainable if what is owed is actually paid.”
The Cayman Islands, British Virgin Islands and other British overseas territories have become major international financial centres thanks to low taxation, light-touch regulation and limited requirements for those who invest there to disclose information about their affairs.
Big businesses say they use such jurisdictions to help avoid double taxation on international trade, but critics say the territories help companies to avoid paying tax on their profits and to facilitate money laundering and tax evasion on the part of rich individuals.
Some of the 10 countries that received the letter were identified by British tax authorities this month as home to complex tax arrangements.
Cameron asked all the letter’s recipients to sign up to the Multilateral Convention on Mutual Assistance - a protocol developed by the Council of Europe and the Organisation for Economic Cooperation and Development that facilitates cooperation between states on tax matters.
In addition, Cameron said the territories needed to produce an action plan on how to improve their transparency with respect to ownership of assets and companies.
“Put simply, that means we need to know who really owns and controls each and every company,” he said.
Such steps would make the territories less attractive locations for hiding stolen assets or evading taxes, but are unlikely to affect the kind of shifting of corporate profits that has angered British policymakers and the public, since this rarely involves hiding beneficial ownership.
In early May, Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands joined the Caymans and Gibraltar in agreeing to provide Britain, France, Germany, Italy and Spain with details of bank accounts held by their citizens in the territories.
The territories receiving the letter were Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.
Additional reporting by Tom Bergin; Editing by Kevin Liffey