Tax collection is an essential element of any poor country’s development. Last month, DFID announced £6 million of funding for international projects to help poor countries with revenue collection and to combat tax evasion and avoidance.
It might surprise the House that the British overseas territories and Crown dependencies receive more foreign direct investment than Brazil, Russia, India and China combined. What more can we do to ensure that the former jurisdictions are not helping international companies to avoid paying tax to less developed nations?
At the Lough Erne summit, the Isle of Man, Guernsey and Jersey agreed automatically to exchange tax information on the basis of the Foreign Account Tax Compliance Act. All the overseas territories have said that they will conclude similar agreements with the UK. A pilot in the EU is developing the practice further. If accounts are more open and less hidden, poor countries will be in a much better position to raise their own taxes.
Large multinational companies are avoiding paying tax in developing countries. Having tax transparency here can help to increase the tax receipts in those countries. When will the Government come forward with firm proposals to introduce country-by-country reporting right here in the UK?
The UK is leading by example. We are taking action to put our own house in order on this issue. We have announced that the UK will introduce new rules that require companies to obtain and hold information on their beneficial ownership. That information will be held in a central, publicly accessible registry maintained by Companies House.