A register of the true owners of shadowy shell companies will be made public as part of the fight against tax dodgers, David Cameron will announce today.
The Prime Minister will say that the ” cloak of secrecy” around company ownership had resulted in “questionable practice and downright illegality”.
Mr Cameron, who made tax transparency a key theme of the G8 summit in Northern Ireland, will urge other world leaders to build on the commitments made at Lough Erne.
He will promise a “relentless” pursuit of businesses which break the rules and claim that by making the register public it will be easier for firms and developing countries to see who they are really dealing with.
Speaking at the Open Government Partnership summit in London he is expected to say: “For too long a small minority have hidden their business dealings behind a complicated web of shell companies – and this cloak of secrecy has fuelled all manner of questionable practice and downright illegality.
“Illegality that is bad for the developing world – as corrupt regimes stash their money abroad under different identities. And illegality that is bad for Britain’s economy too – as people evade their taxes through untraceable trails of paperwork.
“Not only is this hugely unfair to the millions of hard-working people in Britain who pay their tax but it’s also bad for business. To keep corporate taxes low, you’ve got to keep corporate taxes coming in. As I’ve put it, no tax base – no low tax case.
“So that’s why we need to shine a spotlight on who owns what and where money is really flowing.
“This summer at the G8 we committed to do just that – to establish a central register of company beneficial ownership. And today I’m delighted to announce that not only is that register going to go ahead – but that it’s also going to be open to the public.”
The decision to make the UK register publicly accessible was welcomed by campaigners and business leaders.
Mr Cameron will say: ” Some people will question whether it’s right to make this register public. Surely we could get the same effect just by compiling the information and using it within government?
“Now, of course we in Government will use this data to pursue those who break the rules. And we’re going to do it relentlessly. But there are so many wider benefits to making this information available to everyone.
“It’s better for businesses here – who will be able to better identify who really owns the companies they’re trading with. It’s better for developing countries – who will have easy access to all this data without submitting endless requests for each line of enquiry. And it’s better for us all to have an open system which everyone has access to – the more eyes that look at this information, the more accurate it will be.”
Roger Barker, director of corporate governance and professional standards at the Institute of Directors, said: ” From a governance perspective, it is right that the true owners of companies should be transparent both to the company itself and the wider business community.
“Using the corporate veil to obscure underlying ownership brings the corporate sector into disrepute and creates significant opportunities for wrongdoing or criminal activity. Significant practical challenges remain in order to ensure that any register of beneficial ownership is accurate and robust, but we support government efforts to begin this process.”
Gavin Hayman, director of anti-corruption campaigners Global Witness, said: “Anonymous shell companies are the global getaway cars for crime, corruption and tax evasion.
“Full credit should go to the Prime Minister and the Business Secretary (Vince Cable) for acting to take away the keys.”
Chris Bain, director of aid charity Cafod, said: “E arlier this year the G8 showed that transparency is now the norm for both governments and business and this step further builds on that.
“It is both the right thing to do as it will support the global fight against money laundering and tax evasion, and also shows that the Government has listened to public opinion.
“Above all it will be vital for our international partners in their fight to prevent resources intended for poverty eradication being siphoned off. We will continue to work with the Government to make sure that this register has comprehensive coverage, and with other governments to introduce comparable measures.”
Poverty campaign group One said it was a “really important moment in the fight against corruption”.
One’s Europe executive director Adrian Lovett said: ” David Cameron has made life much more difficult for the criminal and corrupt who exploit secrecy around company ownership.
“Making information about who owns and controls companies publicly available will give citizens and journalists in developing countries access to the data they need to follow the money and root out corruption.
“As we take forward this challenge to crack down on corruption, we need the same determination to tackle trusts as we’ve seen here on companies.”
“Until trusts are part of the package we risk closing one door to corruption while leaving a back window wide open,” calling on Mr Cameron to “take the fight to Europe”.
Shadow treasury minister Shabana Mahmood said Mr Cameron “needs to go much further to tackle tax avoidance”.
“With the amount of uncollected tax rising in the last year to £35 billion, it’s clear this Government is failing. David Cameron needs to explain why he decided not to close down the eurobonds tax loophole and why his Swiss tax deal has raised a fraction of the money promised.
“The Government should also be doing more to open up tax havens and extend the Disclosure of Tax Avoidance Schemes regime, which Labour introduced, to global transactions.”
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Shell company owners to be revealed
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