Chancellor George Osborne Presses for Mutinational Tax Crackdown

A committee will be set up by the OECD to look into transfer pricing, which is used to lower tax payments even in high-tax jurisdictions.

London (I-Newswire) February 28, 2013 - On his meeting with other G20 members in Moscow, George Osborne will express his determination to stop the practice of profit-shifting by firm giants.

Member countries of G20, including German and France, are also supportive in quelling companies from transferring their profits to other countries to avoid substantial tax payments.

BBC News Chief Economics Correspondent Hugh Pym says Google, Amazon, and Starbucks are among those on the list of tax-avoiding firms.

These global companies are criticised for avoiding tax from the profits they make in the UK, according to a report. Such controversy caught the attention of the Organisation for Economic Co-operation and Development (OECD), which led to a call for a major change in tax laws that will be raised at the G20 meeting in July, with the UK heading the committee. Two other committees will also be created.

For its part, Germany will be responsible for looking into how companies are able to reduce their taxable income and assets. France and the US, on the other hand, will determine how business tax laws, particularly on e-commerce will be implemented on various companies.

Although Osborne acknowledges the benefits of multinational companies for the UK workforce, he said that these firms still have to pay their taxes. He added that the economy changes but international tax laws have remained the same for the past decades.

A report will be submitted by the three committees to ensure that multinational companies will be paying their fair share of liabilities. He said that global tax rules have not changed for almost 100 years and that Britain will spearhead the call to action to ensure that appropriate corporate taxes will be paid by businesses.

The chancellor wants to use Britain’s assumption of the one-year Presidency of the G8 this year to drive for developments on the changes in international tax rules, which have remained the same since its development in the mid-1920s by the League of Nations.

Meanwhile, Labour leader Ed Milliband is not impressed with what George Osborne has been saying. He remarked that the chancellor has been talking about taking on the issue but he has not seen any proof. Milliband commented, "Of course, he should be dealing with tax avoidance, but one of the things he's doing is cutting taxes for the richest people in society - £100,000 tax cut for the richest people in Britain - the wrong thing to do at a time when everyone else's living standards are squeezed."

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