Next week the world’s richest nations will be meeting in Northern Ireland and are expected to consider ways that they can address the present exploitation of international tax law, especially by larger, corporate groups, who seek to move profits to lower tax jurisdictions in order to minimise their group tax liability.
The economic costs are significant. As Google and Amazon have demonstrated in the UK, they can quite legitimately divert profits off-shore, and pay tax in countries with lower tax rates, on turnover generated in the UK.
Politically, George Osborne is under pressure to address this issue on behalf of smaller UK businesses that are required to pay tax on UK profits and in reality cannot afford to set up the complex off-shore arrangements available to wealthier companies. Whether a constructive solution will be found remains to be seen but all parties at the G8 will be under pressure to create a level playing field.
