LONDON, UK — David Cameron had hoped his initiative against tax evasion and murky financial dealings would headline the annual summit of the Group of Eight industrial countries he hosts Monday and Tuesday.
That issue is dominating relations between most G8 members and Russia, whose President Vladimir Putin on Sunday called Bashar al-Assad’s regime “legitimate” and vowed to continue supplying his government weapons “in line with international law.”
He lashed out at Western countries for providing arms to Syrian rebels. Speaking at a news conference after meeting Cameron on Sunday, he described graphic internet video footage apparently showing a rebel fighter biting into the internal organ of a government soldier.
“One shouldn’t support people who not only kill their enemies, but open their bodies and eat their intestines in front of cameras,” he said. Putin is expected to discuss the issue with President Obama on the sidelines of the summit on Tuesday.
Nevertheless, Cameron hopes to direct at least some attention to the issues of tax avoidance and transparency.
“Companies need to wake up and smell the coffee because the customers who buy from them have had enough,” he said at the World Economic Forum in Davos last January — a jab at Starbucks, one of the firms accused of avoiding its fair share of taxes. Apple and Amazon are also on the list.
Cameron’s agenda addresses both offshore tax havens and domestic jurisdictions with laws and loopholes amenable to funny accounting, part of an elaborate global network that enables the wealthiest companies and individuals to tuck away earnings from the taxman’s grasp around the world.
Britain is no stranger to either. Its overseas territories and self-governing possessions such as Bermuda, the Cayman Islands and Guernsey are popular hosts for shell companies.
And the arcane tax laws of the City of London — the square mile business district at the heart of the capital — make it an attractive and powerful player in the global tax evasion game.
Google dominated headlines here last week, when parliament demanded an investigation into its accounting practices after whistleblowers cast doubt on information it provided about where its sales take place.
The company that prides itself on the clean and simple interfaces of its information-mining tools has built an elaborate multinational web of accounting tricks to keep the bulk of its profits in Britain beyond the reach of the UK’s tax system.
Google paid just $16 million in corporate taxes on $18 billion in British revenues between 2006 and 2011, the company told parliament last month.
Before asking Obama, German Chancellor Angela Merkel and others to clean up their business, Britain has made an effort to clean up its own. Last week, the UK announced it would identify the ultimate owners of shell companies and make the information available to the tax authorities and law enforcement.
“If the UK can get its G8 partners and its own tax havens to have registries and to make them public too, it could be transformational in addressing one of the murkiest parts of the world’s economy,” said Gavin Hayman, campaigns director at the transparency group Global Witness.
The government will even consider making the information available to the public — as long as doing so won’t disadvantage British businesses, Cameron said.
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Even if Syria doesn’t crowd tax evasion off the agenda entirely, however, some critics are skeptical the discussion will have any lasting effect.
While the problem costs the world’s economy trillions each year — particularly in the poorest countries — it also provides tax havens with serious revenues, money they won’t want to lose to places that don’t play by the rules.
Next year, the G8 is set to meet in Russia, which may not be eager to keep business transparency on the agenda.
“It is worth noting, however, that a year ago the idea that tax havens would be on the G8 agenda at all would have been laughable,” wrote editor Larry Elliott in the Guardian. “So the fact that the west’s leaders are discussing the issue is progress.”