LONDON: Britain is not able to crack down on tax avoidance because of the European Union, Boris Johnson claimed yesterday.
He said the UK could not stop big businesses ‘sluicing money’ off Luxembourg – and that a scheme designed as a solution to tax avoidance was failing because of the EU.
Research by Vote Leave showed British taxpayers have been left out of pocket by £2.36billion since 2012 after EU judges overhauled UK tax laws.
The figure was enough to have paid for an additional 29,205 more NHS nurses, according to the research.
A European Court judgment in 2006 ruled that the UK could not tax subsidiary companies located in countries with low tax laws in the EU.
The ongoing cost – after the UK had to make changes to its taxing of foreign companies – is £840million a year.
Leave campaigners said the judgment had ‘encouraged artificial schemes’.
They said even the European Commission had admitted ‘single market’ rules ‘allow for even greater mobility of tax bases and profits’, allowing multinational companies to avoid tax by shifting profits and losses within the ‘single market’.
The Government’s solution to multinational tax avoidance, the so-called diverted profits tax (DPT) , had raised no revenue to date, Vote Leave said.
The total revenue forecast to be raised between 2016-17 to 2020-21 is now £0.5billion, down from £1.36billion when it was announced in December 2014.
The money generated is expected to be just 6.8percent of what HMRC expects to pay big businesses as a result of EU law challenges to UK tax legislation.
Mr Johnson said: ‘We can’t stop them sluicing money off Luxembourg and the diverted profits tax doesn’t seem to be yielding the revenues that it should and that is because of the way the EU works’
‘We are not able to crackdown on tax avoidance.’
Many experts have doubted whether the DPT is compatible with EU law itself – raising fears it could be struck down by the European Court.
Vote Leave chair Gisela Stuart said: ‘The EU works well for businesses but not for hard working families.
‘The EU’s rulings have helped multinational businesses to avoid paying billions in taxes here in the UK.
‘That’s money that could be invested in our NHS. The best way to stop big businesses from avoiding tax is to Vote Leave so we can take back control and reintroduce a fair system that works for the British taxpayer not big business.’
