LONDON (Reuters) - A new database of company ownership details, designed to expose international money laundering and tax evasion schemes, will be opened up to public scrutiny, British Prime Minister David Cameron said on Thursday.
The plan advances Cameron’s efforts to push money laundering and tax evasion to the top of the global agenda, and follows up on a debate at the G8 summit of the eight of the world’s wealthiest states in June.
The “beneficial ownership register” goes beyond the existing registration of corporations and shareholders by untangling deliberately opaque ownership structures to help authorities track down those who are using low-tax regimes overseas to illegally reduce their tax bills.
By making the data public, a decision taken after a consultation with businesses and pressure groups, the government hopes to put more pressure on firms and individuals seeking to hide wealth and profits.
“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 manners of questionable practice and downright illegality,” Cameron said at an conference in London promoting open governance.
Cameron urged other countries to follow suit.
At June’s G8 summit he was unable to secure a concrete agreement from leaders to guarantee they would take similar steps, only a promise that they would draw up a plan to provide more data on company ownership.
The question of how much tax corporations pay - especially when the government has imposed cuts on ordinary people to reduce Britain’s debt pile - has been highlighted by disclosures that companies such as Starbucks and Amazon pay little or no tax into British coffers, provoking a public and political uproar.
While they operate within the rules to minimize their tax burden, it is hoped the new register will shine a light on firms illegally evading paying tax.
Britain’s register will hold information on those who have 25 percent or more of a company’s shares or voting rights, or who otherwise control the way it is run, the government said.
However, Cameron confirmed it would not cover complex trust structures which can also be used in tax avoidance schemes.
Campaigners said that by making the first move with the register, Britain had set a welcome precedent for others.
“This sets such an important global principle ... You have to have someone who makes a stand on principle and then gets the world to follow. In this case it’s the UK,” said Gavin Hayman of the anti-corruption group Global Witness.
Improved transparency in the European Union is being debated, and legislative proposals in the United States could beef up company ownership disclosure. Hayman said neither was expected to quickly follow Britain’s lead.
Cameron’s attempts to cut tax evasion have been complicated by the fact that Britain is seen as a market leader in giving access to offshore tax havens in former British colonies.
“The UK has been one of the pillars of financial secrecy in the past so this is quite a significant shift,” Hayman said.
In June the prime minister persuaded those territories to sign up to international transparency protocols.
Roger Barker, spokesman for the Institute of Directors, said practical challenges remained, but supported government efforts over the issue.
“Using the corporate veil to obscure underlying ownership brings the corporate sector into disrepute and creates significant opportunities for wrongdoing or criminal activity,” he said.
Editing by Alison Williams