Tax havens, tax avoidance, and government support for businesses during the coronavirus pandemic

Following controversy over the prospect of taxpayer funds being made available to support companies with a history of tax avoidance, there have been calls in the UK and around the world to exclude companies based in tax havens from accessing government support.

Whilst such eye-catching policies are popular, they are likely to be ineffective, according to TaxWatch’s latest report Paying in Equally?

Instead, our report suggests a package of reforms aimed at meeting the government’s goal of ensuring that all who benefit from state support pay in on an equal basis. This includes:

  • Making tax exiles liable for dividend income tax on profits derived from UK based companies.
  • Making government support for business repayable if a company is found to be engaging in tax avoidance.
  • Creating a list of companies ineligible for state support due to involvement in tax avoidance (regardless of whether that avoidance uses a listed tax haven).
  • Invest resources into tax enforcement to ensure better compliance with anti-tax avoidance legislation.
  • Mandate the publication of tax data by large, multinational companies.
  • Making data available to the public on which companies are accessing support schemes and on what terms.

To read the briefing in full, please click here. A PDF version is also available here.

Since publishing, this report has been covered by The Times, Law360, and our Director has published an op-ed on the issue in the New Statesmen, and has been interviewed on talkRADIO.1

Photo by Edwin Hooper on Unsplash

1The interview on the Alexis Conran shows is at 1145hrs on Sunday 10 May 2020.