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Transparency Is The Key To Multinationals Paying Fair Taxes

05/09/2016 08:09 | Updated 05 September 2016
Christopher Furlong via Getty Images

When Parliament returns today, the Commons will get its teeth into the Finance Bill one last time. And the big question of the day will be multinationals and the taxes they pay - or don't pay.

Last week, the European Commission made the ground shake, when it handed a €13billion tax bill to Apple, having calculated that the tech giant paid just 0.005 per cent taxes on its European profits in 2014.

Earlier this year, as a member of the Public Accounts Committee, I questioned HMRC and Google over their £130million deal over a decade's worth of unpaid back-taxes. Was this good value for the taxpayer? Perhaps we will never know, as the details, like Google's business, is shrouded in mystery.

Secrecy and complexity are the weapons of the wealthiest multinationals. They create shell companies and internal company transactions shifting money around the world. This allows them to report or shelter their profits in low or no tax dominions. The effect is to minimise the tax contribution in the very countries where they have most employees, apparently doing the most business.

But Governments are not powerless. Yes, they will have to work together, with the EU, with the G20, to share and coordinate their response.

But that can only come after the first big step. Transparency.

If every business with a substantial presence in the UK, had a light shone on their revenues, employment numbers, and taxes paid, this would be a game changer.

They have to report this data to HMRC already. But publishing it, well that would tilt the scales away from secrecy and help Governments both here and elsewhere.

In June, I proposed to take the headline information about where multinational companies do business and where they pay their taxes and put it in the public domain.

The Government did not want to move ahead with this alone. But the Government supports the principle, and recognises the growing support for transparency. In June, The measure had the backing of almost the entire membership of the cross party Public Accounts Committee. Eight parliamentary parties, and some Conservatives MPS backed the measure too. International development charities including Oxfam, Action Aid and Christian Aid - it is the poorest countries that lose the most to profit shifting - and transparency organisations such as Global Witness and Tax Justice Network all pledged their support.

There is even a business-led lobby FairTaxMark that rejects using tax havens, and backs corporate social responsibility - paying fair taxes for the general good.

Isn't one of the biggest problems here is that homegrown companies play by one set of rules while the multinationals play by another?

But with the UK economy coping with uncertainty arising from the EU referendum, Ministers are cautious and I recognise that. If the UK faces short term economic turbulence, no one in parliament wants to make things worse.

So the new proposal before the Commons has taken on board Government concerns. The proposal gives the Minister the clear power to require this information to be published, but doesn't force their hand over when.

The power to introduce public country-by-country reporting would be established. The principle agreed. And Government would have a new weapon in its armoury against the tax avoiders.

I hope the Government see this amendment as a positive, pro-business measure, accept it, and allow all sides of the Commons to come together with one voice.

Parliament will send a clear message to the business community. The UK will become a leader in the campaign to shine a light into the dark corners of multinational profit shifting, shell companies and tax avoidance.

Parliament will be standing up for fair taxes. For all companies to pay responsible tax and to play by the same set of rules.

If Parliament steps up, we won't be the last country to do so. But the UK will be at the front of the pack. Right where we should be.

Caroline Flint is the Labour MP for Don Valley

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