Chancellor George Osborne has signalled the government’s intention to prevent multinational IT firms from diverting profits offshore in order to avoid corporation tax in a move which could clamp down on the use of Ireland as a primary tax jurisdiction to avoid UK tax liability
In his speech to the Conservative party conference today, Osborne said that some technology giants go to ‘extraordinary lengths’ not to pay tax in the UK, and said he would be introducing proposals in the Autumn Statement in December to address the issues.
While the Chancellor stopped short of outlining the specifics of the new legislation, it is expected to prevent global technology firms from artificially moving profits which have been earned in the UK to offshore tax havens, the so-called ‘double Irish’ arrangement.
Osborne said of the companies: ‘You are welcome here in Britain with open arms. While we offer some of the lowest business taxes in the world, we expect those taxes to be paid. If you abuse our tax system, you abuse the trust of the British people.’
Osborne’s speech did not mention any companies by name, but the Public Accounts Committee has been vocal in its criticism of suppliers such as Google and Amazon, who it claimed paid less corporation tax than was expected given their earnings in the UK.
John Cridland, director general of the CBI, said: ‘Setting low and fair business taxes is the right goal for the UK. The CBI supports transparency on tax and will work with the government to ensure that tax rules are fair on both sides. Companies will always want to operate within the rules.’
The EU is also expected to issue an initial ruling today on whether multinationals including Apple and Fiat are contravening EU tax laws in various jurisdictions by moving profits around the EU to reduce or avoid tax liabilities.