Reuters - Video

Edition: US | UK | IN | CN | JP

Business

UK tax avoidance row spreads to banks

Monday, January 14, 2013 - 02:21

Jan. 14 - Investment bank, Goldman Sachs, is said to be putting off paying bonuses to UK staff until the country's tax comes down from 50% to 45% in April, while aggressive tax avoidance is 2013's hot topic for governments. Joanne Nicholson reports

▲ Hide Transcript

View Transcript

Wealthy celebrities - like Gerard Depardieu - are emigrating to avoid it Multinationals have been dodging it And now the banks are back in the frame for their version of tax avoidance. Investment bank, Goldman Sachs, is said to be delaying paying out bonusses to UK staff until the country's top rate of tax drops from 50 percent to 45 percent in April. Chris Hughes is from Reuters Breaking Views SOUNDBITE English CHRIS HUGHES, BREAKING VIEWS SAYING "The problem with this is it's so out of tune with the current mood of "look everyone ought to pay the appropriate rate - it looks like gaming the system....there is clearly a reputational cost to it. I wouldn't be surprised if you were able to quantify these things, was probably higher than if you just paid all the staff a bit more to compensate them." Lloyds Banking Group and Royal Bank of Scotland are also reportedly paying the bulk of their bonuses in June - despite the UK tax payer owning a stake in them. It's thought to be a way of maximising staff pay outs at a time when some banks have costly bills to pay. Several have been fined for poor anti-money laundering controls, fixing the interbank lending rate, and mis-selling payment protection insurance. Jeremy Stretch, from CIBC, says the likes of Goldman Sachs can ill afford a negative backlash. (SOUNDBITE) (English): JEREMY STRETCH, HEAD OF FX STRATEGY, CIBC, SAYING: "The financial sector has performed very poorly as far as reputational risk over the course of last couple of years during the financial crisis and anything that's seen to add to that reputational risk would be seen as a rather retrograde step and I think there are plenty of reasons for all the media and the political classes to want to bash the banks and delay bonus payments until lower tax regimes come in I think will just be another sign there'll be further public clamour against the banking sector which I think will be bad for all of those in financial services." Britain's finance minister says he supports public opinion on the tax issue and has vowed to go after anyone or any company trying to avoid paying it. But some multinationals argue governments create tax structures to attract investment. And there's concern that tackling avoidance could trigger a tax rate battle between countries desperate for corporate currency. Governments and businesses are looking to reform. And it'll be high on the agenda at next month's G20 meeting when the Organisation for Economic Co-operation and Development presents its tax report.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

UK tax avoidance row spreads to banks

Monday, January 14, 2013 - 02:21