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14th Aug 2022

British PM tries to break deadlock on tax havens

  • Cameron: tax havens must 'get their house in order' (Photo: World Economic Forum)

EU leaders will make another bid to agree rules on tax evasion after UK Prime Minister David Cameron called on 10 British tax havens to "get their house in order" on secret bank accounts.

In a letter released Monday (20 May) to the leaders of the British islands, including the Channel and Cayman islands, Cameron urged them to disclose details of accounts used for company ownership.

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The islands should "provide for fully resourced and properly managed centralised registries, that are freely available to law enforcement and tax collectors, and contain full and accurate details on the true ownership and control of every company," he said

“We need to know who really owns and controls each and every company," he added.

He noted that the reforms were at “the heart of the ambition of Britain’s G8 to knock down the walls of company secrecy.”

Cameron's move is the latest attempt to break the deadlock on EU rules aimed at requiring the automatic exchange of data on tax cheats within the bloc.

On Wednesday (22 May) EU leaders will gather in Brussels for a summit where tax evasion and bank transparency will top the agenda.

EU finance ministers failed to reach agreement on the new regime in Brussels last week.

Luxembourg's finance minister Luc Frieden and Austria's Maria Fekter told reporters that they would not sign up to proposed EU rules on the issue until the UK took steps to crack down on tax fraud in its overseas protectorates.

However, ministers agreed to start talks with Switzerland, along with Liechtenstein, Monaco, Andorra and San Marino, on swapping bank account information.

Tax avoidance and bank secrecy have leapt up the political agenda in Europe as cash-strapped governments bid to maximise their tax revenues.

A paper prepared for the European Commission by tax expert Richard Murphy and his UK-based Tax Justice Network think tank claimed that up to 1 trillion of tax revenues are lost each year by EU countries.

At a time when most Europeans are facing tax hikes to fund deficit reduction, governments are also anxious to demonstrate that the super-rich will pay their share.

Meanwhile, politicians in France and Greece have also come under fire over the alleged use of secret bank accounts. French budget minister Jerome Cahuzac resigned in April after admitting to holding a Swiss bank account worth €600,000 to evade tax.

Investigations are also continuing into the so-called 'Lagarde list', held by the French managing director of the International Monetary Fund (IMF), which allegedly includes the names of 2,000 Greek politicians who hold secret accounts in Switzerland.

For their part, MEPs in Strasbourg will also debate tax policy on Tuesday (22 May) and are expected to demand an EU-wide blacklist for tax havens.

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