By Ainsley Thomson
LONDON--Prime Minister David Cameron Monday urged the leaders of
the U.K.'s offshore financial centers--including Bermuda, the
Cayman Islands and Jersey--to "knock down the walls of company
secrecy" and take measures to find out who really owns and controls
each and every company, as Britain steps up its fight against tax
avoidance and evasion.
In a letter to the leaders of 10 U.K. crown dependencies and
overseas territories, Mr. Cameron said while he respects their
right to be lower tax jurisdictions, low taxes are only sustainable
if what is owed is actually paid and if international tax rules are
enforced fairly to create a level playing field across the
world.
"There is no point in dealing with tax evasion in one country if
the problem is simply displaced to another," Mr. Cameron said.
The prime minister called on the crown dependencies and overseas
territories--Bermuda, British Virgin Islands, Cayman Islands,
Gibraltar, Anguilla, Montserrat, Turks and Caicos Islands, Jersey,
Guernsey and the Isle of Man--to establish centralized registries
that contain information about who owns and controls companies
operating within their jurisdictions.
"These will need to provide for fully resourced and properly
managed centralised registries, that are freely available to law
enforcement and tax collectors, and contain full and accurate
details on the true ownership and control of every company," Mr.
Cameron said.
Mr. Cameron's letter comes amid a crack-down by his
government--and other governments across Europe--on tax evasion and
avoidance in response to the heightened public resentment about the
seemingly low taxes paid by some large firms and individuals during
a period of austerity.
The U.K.'s crown dependencies and overseas territories present a
conundrum for the government: while the low tax regimes and light
touch regulation has allowed them to become flourishing financial
centers that are not reliant on handouts from the U.K. government,
it has left them open to accusations that they are havens for
individuals and companies looking to minimise their tax bills.
Last month, Austrian Finance Minister Maria Fekter--under
pressure to ease her country's strict banking secrecy laws--pointed
her finger at the U.K.'s crown dependencies and overseas
territories, labelling them a paradise for money laundering and tax
evasion.
The U.K. government has been working hard to bring the crown
dependencies and overseas territories into line and has already
reached agreement with them to share information about bank
accounts. But although the U.K. represents them on the
international stage, the territories have legal systems that are
independent of the U.K.
On Wednesday, Mr. Cameron will attend a summit of European Union
leaders in Brussels where tax evasion and avoidance is on the
agenda.
Meanwhile, the prime minister will meet with Google Inc. (GOOG)
Chief Executive Eric Schmidt later on Monday, with the issue of the
internet giant's U.K. tax affairs expected to be discussed.
The meeting comes after U.K. lawmakers last Thursday accused the
company of manipulating how it characterized its business in
Britain to lower its tax bill, a claim denied by Google which says
it complies fully with tax laws.
Mr. Schmidt on Sunday wrote an article in The Observer newspaper
in which he said Google tried to "do the right thing," with regard
to its tax affairs, but said that international tax rules were
complicated and could benefit from reform.
He added that while profit was sometimes regarded as a "dirty
word," it was worth remembering that corporate profits led to job
creation and investment in research and development, which
ultimately led to higher tax revenue.
Write to Ainsley Thomson at ainsley.thomson@dowjones.com