Leaders from eight of the world's wealthiest countries spent the final hours of their summit today focusing on how to make sure that multinational companies can no longer rely on shelters and loopholes to avoid paying the tax they owe.
British Prime Minister David Cameron, host of the two-day G-8 summit at a remote lakeside golf resort in Northern Ireland, promised "significant developments on tax" in a tweet before heading into a morning discussion on the subject with the leaders of the United States, Germany, Russia, France, Italy, Canada and Japan.
British lawmakers have sharply criticised Google, Starbucks and other US multinationals operating in Britain for exploiting accounting rules by registering their profits in neighbouring countries such as Ireland, which charges half the rate of corporate tax, or paying no tax at all by employing offshore shell companies.
But Britain itself stands accused of being one of the world's premier links in the tax-avoidance chain. Several of the UK's own island territories including Jersey, Guernsey and the British Virgin Islands serve as shelters and funnel billions each week through the City of London, the world's second-largest financial market.
"Of course Britain's got to put its own house in order," said Britain's treasury chief, Chancellor of the Exchequer George Osborne, who was invited to address the G-8 meeting on corporate tax reform.
Before the summit, Britain announced a provisional agreement with the finance chiefs of nine of its offshore dependencies to improve their sharing of information on individuals and companies banking cash there.
Many of the world's leading companies, ranging from Apple to the management company of U2, employ complex corporate structures involving multiple subsidiaries in several countries to minimise the tax bills in their home nation.
One such manoeuvre, called the "double Irish with a Dutch sandwich" allows foreign companies to send profits through one Irish company, then to a Dutch company and finally to a second nominally Irish company that is headquartered in a usually British tax haven.
The US said it was committed to reforming the global accounting rules and collecting more of US companies' profits banked outside American shores.
"The goal of cracking down on tax avoidance, bringing greater transparency to it, this is something we've pursued in the United States, and we agree with Prime Minister Cameron that we can work together multilaterally to promote approaches that achieve those objectives," said Ben Rhodes, President Barack Obama's deputy national security adviser.
