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ActionAid slams CFC reform as poll shows support for action to tackle avoidance

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A new YouGov poll shows a ‘strong demand for tougher government action’ on corporate tax avoidance, according to ActionAid, the anti-poverty group. The poll of 1,764 adults found that 79% thought the UK government was not doing enough to tackle avoidance by large businesses.

The results revealed ‘widespread support’ across the political spectrum and in all regions, ActionAid said. Seventy per cent respondents agreed that companies should pay their ‘full share’ of tax and it was ‘not acceptable for them to use loopholes in the law’, and that it was ‘irresponsible’ for companies to use loopholes to reduce the tax they pay in the UK or in developing countries.

As Tax Journal reported last month, UK government has resisted calls for an assessment of the potential impact on developing countries of imminent reforms to the controlled foreign companies (CFC) rules, despite a warning that a ‘huge increase in tax avoidance’ could cost countries that are dependent on development aid up to £4bn.

HM Treasury said then that that helping to build capacity in developing countries was the key issue, and that ‘through the UK corporate tax system’ was not the best way to help developing countries protect their tax base. 

But a new ActionAid report titled Collateral Damage, published yesterday, warns that ‘the government is planning to open up a huge new tax loophole that will cost ordinary people around the world billions, just ahead of the most important austerity budget in a generation’.

ActionAid claimed that some multinational businesses, including ‘many involved in high profile tax avoidance disputes’, had ‘lobbied hard to make this new loophole – a relaxation of what is known as “controlled foreign company” rules – as big as possible’.

‘Some 30 companies, with a total of well over 3,000 subsidiaries located in tax havens, lobbied for the changes through advisory groups set up by the Treasury,’ it said.