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James Moore: Tax-avoiding firms sell developing world short

James Moore
Tuesday 24 September 2013 19:56 EDT
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Outlook That's not to excuse businesses from paying the low levels of corporation tax levied in the UK. The problem is too many treat it as an optional charge payable only by those who don't have accountants smart enough to avoid it.

Aggressive tax avoidance is, however, a global problem and while progress has been glacial at least there has been some.

This year has seen an OECD action plan, while the EU has (belatedly) got in on the act by starting to gather information on countries such as Ireland, the Netherlands, and Luxembourg, which have been involved in some of the higher-profile tax-avoidance cases involving largely US-based multi-nationals.

While nations compete on tax as they compete on many other fronts, some of the frankly larcenous behaviour that we have seen is, in reality, in no one's long-term interests.

But if the loss of receipts is harmful in the UK, spare a thought for its impact in the developing world. Action Aid estimates that $300bn (£187bn) a year is lost by developing countries through a combination of aggressive tax avoidance and sweetheart deals.

To put it in perspective, that's twice what was spent on aid last year.

While the UK and its citizens have every right to complain about the receipts that disappear thanks to the sort of structures deployed by the likes of Apple and Amazon, which might otherwise be spent on schools and hospitals, think what all that money could be used for in parts of the world lacking even basic sanitation.

Critics of aid complain that it is used as a crutch and the proverb "give the man a fish and you'll feed him for a day, teach him how to catch it and you'll feed his family for a generation" is often deployed by them. They might add this: tax the Western company that built the computers his fishing business will then use and his kids and lots of others will get an education so they can build sustainable fisheries to feed lots of families.

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