As the FT notes this morning:
Dozens of big and medium-sized UK companies are rushing to set up offices in tax havens such as Jersey, Malta, Ireland, the Netherlands, Luxembourg and Switzerland to take advantage of a policy introduced by the British government in April.
The policy, which creates an “ultra competitive” 5.75 per cent tax rate – a quarter of the full rate – for subsidiaries in tax havens that provide finance for other parts of a multinational group, has alarmed fair-tax activists. And it comes despite promises by David Cameron, UK prime minister, to crack down on tax avoidance by multinationals.
The enthusiastic uptake of the policy means it could end up costing more than the expected £325m a year, say advisers. The rules may end up being tightened. “The political risks are rising,” says one adviser.
Cameron and Osborne might argue that they had to adopt such a policy in the light of the EU’s attitude to controlled foreign companies, but the low tax rate was never required by any such pressure. This scheme, which will result in a haemorrhaging of tax revenue from the UK, was created by choice and shows that Cameron & Osborne are dedicated to tax competition, a philosophy so closely related to a belief in tax avoidance that the two are for all practical purposes to be considered as part of one single mind-set.
Cameron & Osborne says they’re opposed to tax avoidance.
If that’s the case they fail to evidence it in their actions and I take the evidence of action as the true indication of belief in this case.