LONDON, Dec 3 (Reuters) - Britain aims to raise more than 2 billion pounds ($3.2 billion) a year over the next two years by tackling tax avoidance by multinational companies and rich individuals with offshore accounts, the country’s finance ministry said on Monday.
The announcement coincides with a parliamentary report that criticises British tax authorities for being too passive in tackling international firms, and comes days before finance minister George Osborne presents a half-yearly budget statement.
Britain’s public finances are in a worse state than a year ago, largely due to a shortfall in tax revenue caused by economic weakness.
Public sector net borrowing, excluding some one-off factors, needs to drop 1.2 percent to hit its target of 120 billion pounds for the current tax year, but is currently 7.4 percent higher than year earlier.
The finance ministry said that it hoped by spending an extra 77 million pounds on tax collection, officials would be able to bring in some 2 billion pounds more a year. The funding comes on top of an earlier 900 million pounds of spending on tax aimed at collecting 7 billion pounds of unpaid tax.
An agreement reached with Switzerland earlier this year to crack down on Britons with undeclared Swiss bank accounts was expected to generate 5 billion pounds over the next six years, the ministry added.
“While most taxpayers are doing their bit to help us balance the books, it is unacceptable for a minority to avoid paying their fair share, sometimes by breaking the law,” Osborne said in a statement.
“We are determined to tackle this problem and (tax officials) are making good progress, but we are giving them additional tools to bring in more.”
Challenging multinational companies’ transfer pricing arrangements -- which can lead to their British subsidiaries generating very little taxable profit -- would be the main use of the new money, the finance ministry said.
Reforming international rules on corporation tax would also be a big theme for Britain’s presidency of the G7 and G8 groups of major developed economies next year, the ministry added.