Government opens new tax loophole that could cost the UK and poor countries billions | ActionAid UK

Government opens new tax loophole that could cost the UK and poor countries billions

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After a debate that went down to the wire in the house last night, the Government have pushed through the Finance Bill without an amendment that would mitigate the impact of a new tax loophole on developing countries.

Despite the issue being raised by both Liberal Democrat and Labour MPs, proposed changes to Controlled Foreign Companies (CFC) rules have been cleared.

This makes it easier and more lucrative for companies to dodge taxes in poor countries costing them and the UK billions in lost tax revenue.



Melanie Ward, Head of Public Affairs at ActionAid said:"The new tax loophole pushed through parliament yesterday is a green light for tax dodging in the world’s poorest countries.

"It is a lose-lose move which could cost developing countries up to £4 billion a year, and will cost the UK £1 billion a year in lost taxes. It is deeply hypocritical for the coalition government to, on the one hand call tax dodging 'morally repugnant', but on the other make it easier for companies to dodge their taxes.


"The truth is that while the government has been promising to crack down on tax avoidance, they’ve actually been making it easier for big companies to shift profits out of poor countries into tax havens. In doing so they have not only neglected the needs of poor countries but ignored the advice of the IMF, World Bank, OECD and UN.

"The Government has missed a big opportunity to back up its tough talk on tax avoidance and make it a real priority with concrete action."