The Prime Minister has set out a hugely ambitious G8 agenda on tax, transparency and trade (see his speech on 15th June). Getting these issues right is crucial if developing countries and G8 partners are to address the causes of poverty, rather than simply addressing its consequences. In a little over 24 hours, we will see whether the Prime Minister and his G8 counterparts are able to deliver on the ambitious rhetoric. The eyes of the world are watching.
There has been some good news. On Saturday the 15th June, the UK confirmed that all of its Overseas Territories and Crown Dependencies have signed up to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, will participate in the planned system of automatic exchange of tax-related information, and will draw up action plans on who owns and controls companies (so-called beneficial ownership).
In addition, the UK itself has committed to support the establishment of central registries of beneficial ownership. This will be done, in the EU, through the 4th EU Anti-Money Laundering Directive. The UK Government will decide whether to support private or public registries after further consultation. The Prime Minister made clear on 15th June that he “hopes the whole world will move to public registries”, confirming the message he gave to EU leaders in April.
All this is very welcome. The UK Government and the Prime Minister should be congratulated on their leadership. But to really deliver for development, more needs to be done. All G8 countries need to tackle the scourge of Phantom Firms, by disclosing information about who owns and controls companies and trusts through central public registries. This will ensure that such information is available not only to tax and law enforcement authorities but also to citizens organisations, the media and others with a keen interest in following the money and rooting out corruption.
The G8 must also ensure that the system they plan to put in place for the automatic exchange of tax information involves developing countries from day one. Investing in the capacity of tax authorities is important – particularly when it’s focused on building their capacity to automatically exchange information. But what really matters is changing the rules.
By taking these steps, the G8 can make sure that it not only puts its own house in order, but does so in ways that work for people beyond the G8 too. The UK Government must continue to lobby its G8 partners, with no let-up in pace or decrease in ambition. G8 partners must decide where they want to be – backing and shaping the transparency revolution or resisting the tide of history. Africa expects.