Register of people with significant control will not affect Crown territories
The government has quashed calls to look at extending the requirement to publish a public register of people with significant control to companies incorporated in the Crown dependencies and overseas territories, as part of a bid to increase tax transparency, saying new rules on the automatic exchange of information are sufficient to address the issues.
The international development committee has published the government’s responses to its recommendations for tackling corruption overseas, which included the appeal for the government to use the full weight of its influence to lobby the UK’s overseas territories and Crown dependencies to increase transparency by creating public beneficial ownership registers.
The committee ruled out making the registers compulsory, on the grounds that this could raise constitutional questions about the territories’ self-determination and constitutional autonomy. However, it stated that ‘lack of transparency in the overseas territories and Crown dependencies will significantly hinder efforts to curb global corruption and continue to damage the UK’s reputation as a leader on anti-corruption’.
In its response, the government said that the UK Crown dependencies and overseas territories with financial centres committed, where they had not already done so, to establish central registers of company beneficial ownership information or similarly effective systems, and to provide UK law enforcement authorities with rapid access to this information.
The response stated: ‘This will prevent criminals hiding behind anonymous “shell” companies, and marks a significant increase in the ability of law enforcement authorities to investigate bribery and corruption, money laundering and tax evasion. This puts them well ahead of many of our major international partners including financial centres such as Delaware.’
The government also claimed that ‘almost all of the relevant overseas territories and Crown dependencies’ have given their support to the development of a new global standard on automatic exchange of beneficial ownership information between countries. Territories with financial centres have agreed to exchange taxpayer financial account information automatically.
Similarly, in its response the government also rejected calls by the committee to commit to making country by country reporting by UK-based multinational enterprises public.
It stated: ‘In order for public country-by-country reporting to be effective, it must be implemented on a multilateral basis so that all multinationals, both UK-headquartered and non-UK headquartered, will report on their profits made and taxes paid for the full range of countries in which they operate. ‘The government supports international efforts to develop a public model of country-by-country reporting that achieves this. For these reasons, the government does not agree with the recommendation to make country-by-country reporting by UK-based multinational enterprises public at this time.’
Simon Kirkland, Christian Aid’s UK parliamentary and political adviser, said: ‘We are shocked and disappointed that despite the abundant evidence that criminals are abusing UK tax haven secrecy, ministers seem to have gone soft.
‘In its response to MPs today, and in contrast with its recent statements in Parliament, the government has seemingly dropped its demand for the overseas territories and Crown dependencies to follow the UK itself and adopt public registers of who really owns the myriad companies they host.’
Margaret Hodge, chair of the cross-party responsible tax all party parliamentary group, said: ‘More than 80 MPs from eight parties have signed my amendment to the Criminal Finances Bill to ensure that the UK’s overseas territories publish their lists of who owns which companies by the time of the next general election.
‘If Ministers are indeed climbing down from even backing the publication of these registers in due course, then that is very disappointing. The Prime Minister should urgently clarify that she wants these registers to be published and set out a timeline for that to happen.’
