G8 agreed on tax evasion measures

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1_article_photo Recent summit of G8 held in Ireland has shown that the problem of tax evasion is becoming the main focus nowadays. Governments will be taking rapid measures to identify and close existing tax loopholes. Chancellor George Osborne has explained plans to stop international companies veiling their profits from the taxman in offshore ‘shell’ companies. One of the most interesting points made was the decision to oblige all the UK companies to reveal real Beneficial Owners. Mr. Osborne announced that such information would have to be submitted to UK Registrar and might be open to the public in order to make it clear who was getting benefits and all profits from company activities. In order to enforce these measures, Companies Act 2006 will be amended by ministers to set up a central register of information on beneficial owners, to be run by Companies House. Previously UK companies were widely used in international tax planning. In case where a UK Company has an offshore bank account and information about Beneficial Owners is not accessible, financial reports submitted to Company House in UK can contain incorrect information about company’s real activities claiming nill tax returns. Common schemes were involving registration of LLP structures where Partners were some ‘tax heaven’ jurisdictions such as BVI, Belize etc., with Nominee Directors and Shareholders. Due to the fact that tax heavens are not obliged to submit financial reports and all the information about companies is not publicly accessible, real Beneficial Owners receiving the profits were avoiding paying taxes. In addition to disclosure of Beneficial Ownership information, UK has enforced its crown dependencies and overseas territories, such as Channel Islands, Gibraltar and Anguilla, to start sharing more information on which foreign companies bank their profits there. The US has also expressed their support to the proposed measures of the UK, although it is not yet clear if all G8 nations will agree to all the terms of the plan. Tax, Trade and Transparency will be the key ‘three Ts’ for the UK’s agenda for its presidency of the G8.