The Chancellor has demanded Britains offshore tax havens do more to crackdown on illegal evasion as he sought to strengthen a potentially ground-breaking deal to stamp out the criminal activity.
Under a pilot project between Britain, Germany, France, Italy and Spain, tax information will automatically be shared if there is any suspicion of illegal evasion. The agreement goes further than existing bi-lateral exchanges between countries, under which information has to be requested.
George Osborne said the project could be a new front in the battle against tax cheats, and used the G7 weekend meeting of advanced country finance ministers in Buckinghamshire to hint at plans to extend the scheme to developing countries.
Im determined that tax that is owed must be paid, he said. We all agreed on the importance of collective action to tackle tax avoidance and evasion.
Its incredibly important that companies and individuals pay the tax that is due, and this is important not just for Britain and British taxpayers but also important for many developing nations as well.
Britains offshore tax havens, such as the Cayman Islands and the British Virgin Islands, are signed up to the multi-lateral pilot arrangement, but the Chancellor said they needed to go further as some states are currently not part of an existing deal with the US.
It is necessary to collect tax that is owed. And the Crown dependencies and the overseas territories need to play their part in that drive. And they will need to do more, he said.
The UK has made tax evasion and aggressive tax avoidance a key plank of its G7 and G8 presidencies this year, and will be pushing for a new European directive on automatic information exchange at the Ecofin meeting of finance ministers this Tuesday.
Austria and Luxembourg have so far blocked progress towards greater tax transparency but are coming under mounting pressure to sign up. Defending their position in the past, they have argued that the UK had failed to crackdown on its own tax havens.
However, both Britains overseas territories and Crown dependencies are signed up to the multi-lateral deal with Germany, Spain, France and Italy weakening Austria and Luxembourgs position.
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Osborne: Offshore tax havens 'must crackdown on illegal evasion'