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Committee calls for corporation tax review

 

The Treasury should carry out a review of the corporation tax system to ensure that multinational companies pay their ‘fair share’ of tax, according to a parliamentary committee.

 

In a new report, the House of Lords Economic Affairs Committee warns that the UK faces a ‘serious problem’ of avoidance because the international tax system enables large global corporations to shift profits between countries to drive down their tax bill.

 

It argues that this ‘damages the economy’ and ‘undermines trust in the tax system’.

 

Tax avoidance has been in the spotlight in recent months, with high-profile companies such as Google and Amazon under scrutiny for the apparently low levels of tax they have paid in the UK.

 

Commenting, Lord MacGregor, Chairman of the House of Lords Select Committee on Economic Affairs, said: ‘There is a sense that corporation tax is voluntary for some multinationals which operate globally while small UK-based businesses go by the book and have to pay. That brings the tax system into disrepute and loses much-needed revenue.’

 

The Committee expressed its support for the action plan of reform put forward by the Organisation for Economic Co-operation and Development (OECD), but it raised concerns over the Government’s pledge to deliver these changes within the proposed timeframe.

 

‘We recognise that the Government is taking the lead in pursing international agreement to reduce tax avoidance but it is unclear whether these reforms can be achieved in two years,’ said Lord MacGregor.