George Osborne On Tax Avoidance: Chancellor Calls For Global Reform Of Rules

George Osborne has renewed his call for international action in tackling tax avoidance and the so-called "profit shifting" by multinational giants as he unveils the next steps in his fight to reform global tax rules.

The need to overhaul tax laws, including the controversial transfer pricing rules that were written almost 100 years ago, will be highlighted to finance ministers at the G20 in Moscow in a report by the Organisation for Economic Co-operation and Development (OECD).

George Osborne to is to unveil the next steps in the fight against global tax abuse

It comes as companies such as Google, Facebook, Amazon and Starbucks faced a backlash after paying only minimal tax on large UK revenues.

The revelations in particular have hurt Starbucks, with many boycotting their shops and buying their hot drinks elsewhere.

In December, Starbucks said it will pay "somewhere in the range of £10 million" in UK corporation tax for each of the next two years.

The US coffee firm - valued at £25 billion - has generated more than £3 billion of sales in the UK since 1998 but it emerged in October it has paid less than 1% in corporation tax.

Starbucks has said they will pay somewhere in the range of £10m each year

In the wake of the revelations, banking giant Barclays also announced it was to close its tax avoidance unit, which gave advice to large companies on how to avoid paying out tax.

The chancellor will announce that Britain will chair a new transfer pricing group which will look at how to reform the system which allows profits to be diverted to parent companies or to lower tax jurisdictions, via royalty and service payments.

It is one of three groups set up by the OECD to look at the tax issues which will help the group prepare a "plan of action" to be put forward to the G20 in July.

Germany and the US and France also lead the other two groups, which will include looking at how to determine tax jurisdiction, particularly in the context of e-trading.

Osborne said: "Britain has cut its corporation tax rate by more than any other country in the G20 over the past two years, a message to the world that we are open for business that has seen companies return to Britain, and helping to create and secure thousands of jobs and millions in investment.

"But our commitment to the most competitive corporate tax system goes hand in hand with our call for strong international standards to make sure that global companies, like anyone else, pay the taxes they owe.

"That's why Britain, with Germany and France, asked the OECD to scrutinise the international rules, and we will together welcome their report to the G20 this weekend. The report shows this is an international issue that requires international action.

"It shows the global economy has changed massively over the last decade, but global tax rules have stood still for almost a century, and Britain will lead the international effort to bring them into the twenty first century."

Both Clegg and Osborne have called for global reform

Osborne wants to use Britain's presidency of the G8 in 2013 to push international progress on the reform of international tax rules, which were first developed by the League of Nations in the mid-1920s and remain essentially unchanged.

Nick Clegg also used a G8 trip to Africa to call for global action against tax-dodging firms earlier this week arguing that tackling abuses would bolster public support for increasing foreign aid.

He said: "Many of the difficulties that governments face in the developing world are becoming increasingly common in the developed world.

"For too long, the developed world ignored the way in which tax revenues, which rightfully belonged to developing countries, disappeared as people exploited different tax regimes, and made a mockery of governments in the developing world. We must work together to overcome it."

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