We are calling for a Fair Tax Lockdown
In response to the Covid-19 crisis, the UK Government, like many across the world, has made available unprecedented financial support for businesses and workers financially impacted by the crisis and the ongoing lockdown. We believe that this is right and proper, given that the lockdown, with its financial consequences, is being undertaken to lessen the impact of Covid-19 on our health services, and to protect people, especially the elderly and those with existing health conditions.
In addition to the financial support made available, including the Coronavirus Job Retention Scheme, a 12-month business rate holiday and a new lending facility from the Bank of England, some business sectors are requesting bespoke bailout packages. To date, the UK Government has largely resisted these calls, but if bailouts are to progress, then we believe that they should be accompanied with fair tax conditions – what we call a “Fair Tax Lockdown”.
To qualify for financial bailouts a business should:
- Say no to tax havens and tax avoidance. Publish a binding tax policy that explicitly shuns tax avoidance and the artificial use of tax havens, and commits to the declaration of profits in the place where their economic substance arises (i.e., no profit-shifting). This policy should be the subject of an annual compliance audit, and be “owned” by a designated board director.
- Lift the lid on income and tax around the world. Ensure that the consolidated annual profit & loss of the parent company is publicly available, together with details of associated corporation tax payments (total, current and deferred tax). Multinational enterprise should disclose this on a Country-by-Country basis. A current tax reconciliation should be provided, together with a narrative to explain any deviations from the headline tax rate(s).
- Disclose who ultimately profits. Make clear who the ultimate beneficial owners of the business are, and those with significant control.
We believe that these measures are fair, material and proportionate. And, importantly, they are more robust than the conditions set forward by others including Denmark, France and Poland, who say they will stop bailout monies going to businesses based in tax havens. These initiatives are welcome but ultimately weak, being premised on the EU’s tax haven blacklist which does not include significant tax havens such as the British Virgin Islands, Bermuda and the Netherlands.
If a business is not actively involved in tax avoidance, these conditions can quickly and easily be committed to.