G20 nations hail 'once in a century' agreement to close international loopholes
Amazon's huge warehouse in Hemel Hempstead, one of eight in the UK. For taxation, all sales from these go through Luxembourg. Photo: Steve Parsons/PA
Tax structures used by Amazon to route billions of pounds from sales to British customers through Luxembourg, paying negligible UK tax, are among a series of international loopholes earmarked for closure in a programme of reforms backed by G20 nations.
The "once-in-a-century" move to patch up holes in international tax rules was unveiled in Moscow by George Osborne and fellow finance ministers from France and Germany, who have together been the driving force behind calls for reform.
France's Pierre Moscovici said the 15-point action plan, which has been produced by the Organisation for Economic Co-operation and Development club of industrialised nations, was a "major breakthrough" and was "at the heart of the social contract".
"It is clear multinational companies have developed an unprecedented know-how for minimising their worldwide tax pressure," he said. "These situations are literally impossible to explain to our fellow citizens."
Osborne agreed: "People and companies have to pay the taxes that are due, it's the only way to operate in a fair and competitive society … Our message is clear: everyone must pay their fair share of tax."
Under current rules, Amazon's £4.2bn annual sales in the UK, which rely on a network of eight mega-warehouses across Britain, are routed through Luxembourg.
Revenue & Customs has no taxing rights over any profits from those sales. Under the proposals, multinationals with warehouses will be taxed in the country where the distribution centres are located.
Friday's OECD plan, which will lead to firm recommendations within 12 to 30 months, has support of the increasingly influential economies of Brazil, China and India as well as the likes of Luxembourg, the Netherlands and Ireland — all of whom have been accused of beggar-thy-neighbour tax policies.
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The "once-in-a-century" move to patch up holes in international tax rules was unveiled in Moscow by George Osborne and fellow finance ministers from France and Germany, who have together been the driving force behind calls for reform.
France's Pierre Moscovici said the 15-point action plan, which has been produced by the Organisation for Economic Co-operation and Development club of industrialised nations, was a "major breakthrough" and was "at the heart of the social contract".
"It is clear multinational companies have developed an unprecedented know-how for minimising their worldwide tax pressure," he said. "These situations are literally impossible to explain to our fellow citizens."
Osborne agreed: "People and companies have to pay the taxes that are due, it's the only way to operate in a fair and competitive society … Our message is clear: everyone must pay their fair share of tax."
Under current rules, Amazon's £4.2bn annual sales in the UK, which rely on a network of eight mega-warehouses across Britain, are routed through Luxembourg.
Revenue & Customs has no taxing rights over any profits from those sales. Under the proposals, multinationals with warehouses will be taxed in the country where the distribution centres are located.
Friday's OECD plan, which will lead to firm recommendations within 12 to 30 months, has support of the increasingly influential economies of Brazil, China and India as well as the likes of Luxembourg, the Netherlands and Ireland — all of whom have been accused of beggar-thy-neighbour tax policies.
More
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