G-8 summit turns focus to clampdown on tax-dodging

ENNISKILLEN, Northern Ireland (AP) ? Leaders from eight of the world's wealthiest countries spent the final hours of their summit Tuesday focusing how to make sure that multinational companies can no longer rely on shelters and loopholes to avoid paying taxes.

British Prime Minister David Cameron, host of the two-day G-8 summit at a remote lakeside golf resort in Northern Ireland, promised "significant developments on tax" in a tweet before a morning discussion on the subject with the leaders of the United States, Germany, Russia, France, Italy, Canada and Japan.

First, however, Cameron took what a spokesman described as a "brisk" swim in the waters of scenic Lough Erne before heading in to chair the summit's second and final day.

British lawmakers have sharply criticized Google, Starbucks and other U.S. multinationals operating in Britain for exploiting tax rules by registering their profits in neighboring countries such as Ireland, which charges half the rate of corporate tax, or paying no tax at all by employing offshore shell companies.

But Britain itself stands accused of being one of the world's premier links in the tax-avoidance chain. Several of the UK's own island territories ? including Jersey, Guernsey and the British Virgin Islands ? serve as shelters and funnel billions each week through the City of London.

"Of course Britain's got to put its own house in order," said Britain's treasury chief, Chancellor of the Exchequer George Osborne, who was invited to address the G-8 meeting on corporate tax reform. Before the summit, Britain announced a provisional agreement with the finance chiefs of nine of its offshore dependencies to improve their sharing of information on individuals and companies banking cash there.

Many of the world's leading companies, ranging from Apple to the management company of U2, employ complex corporate structures involving multiple subsidiaries in several countries to minimize the tax bills in their home nation. One such maneuver, called the "double Irish with a Dutch sandwich" allows foreign companies to send profits through one Irish company, then to a Dutch company and finally to a second nominally Irish company that is headquartered in a usually British tax haven.

The U.S. said it was committed to reforming the global accounting rules and collecting more of U.S. companies' profits banked outside American shores.

"The goal of cracking down on tax avoidance, bringing greater transparency to it, this is something we've pursued in the United States, and we agree with Prime Minister Cameron that we can work together multilaterally to promote approaches that achieve those objectives," said Ben Rhodes, President Barack Obama's deputy national security adviser.

Campaigners for greater tax transparency appealed to the G-8 to ensure that reforms benefited the poorest countries of Africa, South America and Asia as well as the rich west. Anti-poverty campaigners have stressed that shell companies are a key method of spiriting away funds from a country.

Cameron has said Britain will lead by example by creating a registry of who really owns companies, and will consider making it public ? a move that has run into resistance from other countries.

"G-8 leaders must decide whether they want to shape the transparency revolution or resist the tide of history," said Adrian Lovett, Europe executive director at development campaign group One.

G-8 delegations also faced a final few hours of behind-the-scenes haggling to see whether all eight could express a joint position on ending the two-year civil war in Syria.

Russia's Vladimir Putin, who backs the government of Bashar Assad against rebel forces, during Monday night's working dinner on the issue refused to shift his stance and abandon the Syrian leader. The other seven leaders, including U.S. President Barack Obama, have shown varying degrees of support for the rebels.

Cameron won commitment from the countries attending the summit to stop paying ransoms to kidnappers in hopes of deterring the practice following January's bloody capture by al-Qaeda-linked militants of an Algerian gas facility. Ten Japanese, five Britons, three Americans and a French national were among the 40 civilians killed as Algerian forces retook the facility. A British official speaking on customary condition of anonymity said the agreement would be reflected in the summit's concluding statement.

Hostage-taking of foreign workers for cash payments is on the rise across much of West Africa, particularly Nigeria with its own oil industry dominated by Western companies and foreign managers.

"I want us to discuss how we crack down on terrorist ransoms because this would suffocate one of the main sources of funding for these terrorist organizations, and of course would reduce the incentive to take our citizens hostage," Cameron said ahead of Tuesday's discussions.

Cameron has invited the leaders of Libya and the African Union to join the talks table over lunch Tuesday.

The summit is concluding with rapid-fire statements by each departing leader. Obama continues his European trip Tuesday night in Germany.

Source: http://news.yahoo.com/g-8-summit-turns-focus-clampdown-tax-dodging-103333931.html

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