Tax Treaties June 2016
Thank you for contacting me recently regarding tax treaties between richer and poorer countries and the UK's tax treaty with Malawi in particular [and the related ActionAid campaign].
I share your concerns about the unfairness of the UK's tax treaty with Malawi. The Opposition highlighted this earlier in the year and continues to press the Government to take action.
I understand that the Government is currently negotiating a new treaty with Malawi and stated on 15 June that it hoped that the treaty will be signed shortly. The Government has also said that the negotiating process will remain confidential to the two sides until the treaty is signed. I believe that the era of outdated and unscrutinised tax treaties must come to an end.
The aid Britain provides to Malawi supports fantastic development projects but also considerably strengthens our relationship with the country. This support is undermined by tax avoidance. It is estimated that the developing world loses three times more in tax avoidance to tax havens than it receives in aid from developed countries.
The revelations in the Panama Papers leak highlighted the scale of the use of tax havens and how this hurts the very poorest countries of the world, including Malawi. Millions of British people and businesses pay their fair share of taxes and those multinational companies which try and avoid doing the same should be stopped. Multinational companies should make public how much they pay in tax on a country by country basis, so that a proper rate of tax can be applied. I fully support the Opposition's Tax Transparency Enforcement Programme which includes proposals for HMRC to be properly resourced to investigate tax avoidance and evasion.
I fought the last General Election on a manifesto that included plans to increase the Department for International Development's support to countries to help them collect more of their own taxes, tackle corruption, and ensure good governance. I believe that the UK should be at the heart of efforts to achieve international progress on tax transparency and accountability.
Thank you once again for writing to me and for sharing your views. I can assure you I will continue to support efforts to hold the Government to account on this important issue.