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Corporation Tax

Volume 560: debated on Tuesday 12 March 2013

8. What plans he has to increase corporation tax payments in the UK by large multinational companies; and if he will make a statement. (147130)

13. What steps he is taking to ensure that international companies pay the appropriate levels of tax on revenues earned in the UK. (147135)

The Government are determined to ensure that multinational companies pay their fair share of tax. The UK is committed to taking multilateral action through the G20 and the OECD to tackle the issues of profit-shifting by multinationals and erosion of the corporate tax base. The OECD presented its initial report on addressing these issues at the G20 meeting in Moscow last month and will present a comprehensive action plan to tackle them at the G20 in July this year.

Even if the OECD produces a decent action plan, nothing will happen before September, yet Britain is responsible for some of the biggest tax havens in the world: Barbados, Bermuda and the British Virgin Islands received more foreign direct investment than Germany and Japan in 2010. When did the Minister last talk to the Foreign Secretary about what he could do about these tax havens?

It is worth pointing out that these places are not simply colonies in which we can direct orders; they have a degree of independence. We are working with other countries at the G20 and the G8 and through the OECD to ensure that we have a modernised tax system, which includes addressing jurisdictions where there is a lack of transparency.

Does the Minister agree with me on this very simple principle: companies should expect to be liable for appropriate tax in the UK on goods and services paid for and used by people and organisations based in the UK?

The point I would make is that we want to have an international tax system under which economic activity is taxed where that economic activity takes place. The fact is that the international rules have not moved with the times, but they need to do so, and I am delighted that the Chancellor of the Exchequer is leading the way in this debate.

Many of my constituents—particularly younger constituents and Church groups—are very interested in this agenda and are closely following what the Government are hoping to achieve this year. Is the Minister optimistic that our international partners will respond positively to this agenda and we can make progress on it?

It is fair to say that we are making progress so far. My right hon. Friend the Chancellor has worked very closely with his German and French counterparts in pushing forward this agenda, and I hope we will make significant progress over the months ahead.

Although I wish the Minister success in achieving the international objectives, does he agree that dismantling the ability of the UK tax authorities to deliver on that international agenda is not the way to go about it, and with 2,000 staff at Her Majesty’s Revenue and Customs already having been sacked, does he not worry that we will be unable to deliver on it?

In areas of enforcement and compliance, we are investing more money in HMRC. Staff numbers will increase, and that contrasts favourably with the record of the previous Government. The fact is that HMRC’s ability to get in more money is increasing year after year.