§ LORD BESWICKMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what steps they are taking to prevent tax evasion by United Kingdom companies with holding companies registered in the Grand Duchy of Luxembourg.
§ THE LORD PRIVY SEAL (LORD WINDLESHAM)My Lords, there is no evidence at present that widespread use is being made of Luxembourg holding companies to avoid United Kingdom tax. The matter will, however, be kept under very careful review. There are provisions in the taxation laws of the United Kingdom to prevent tax avoidance, and these can be applied to United Kingdom companies with holding companies registered in the Grand Duchy in just the same way as they can be applied to other companies.
§ LORD BESWICKMy Lords, I am much obliged for the noble Lord's Answer. Whilst we know that there are so-called tax havens elsewhere—in Switzerland, for example—the position with the Grand Duchy is somewhat different; and as we are now talking about the free movement of capital, and indeed a common currency, within the E.E.C., is it not essential that the Grand Duchy comes into line with us so far as taxation is concerned?
§ LORD WINDLESHAMMy Lords, this country has a highly developed sys- 826 tem of legal restraints designed to counter tax avoidance, and the United Kingdom is quite ready to join with its E.E.C. partners in any further examination of tax havens, both within and outside the E.E.C.
§ LORD BESWICKMy Lords, as it is now a fact that the Grand Duchy has, so far as its present legislation goes, exemption for dividends, capital gains, interest and royalties, is it not essential, as I say, that something more is done? And may I take it that Her Majesty's Government have taken the initiative in a further inquiry?
§ LORD WINDLESHAMMy Lords, I understand that a report was published by the European Commission last month recommending joint action to be taken against tax havens. The United Kingdom is equally concerned to prevent companies from avoiding their proper tax liabilities.
§ LORD BESWICKMy Lords, I am much obliged to the noble Lord. I was aware of that report, which is the reason why I put the Question down. I am asking, however, whether Her Majesty's Government will take an initiative in this matter, as we have more to lose than the other countries.
§ LORD WINDLESHAMMy Lords, an initiative has already been taken. What is now required is follow-up action.
§ LORD O'HAGANMy Lords, I wonder whether the noble Lord the Leader of the House could enlighten me a little. Is he aware that on June 6 a Commissioner of the Common Market explained to the European Parliament that the Commission was going to send a report to the Council of Ministers by the 1st of this month? Could he say what position Her Majesty's Government take on this report, which dealt with the special tax position of the Grand Duchy?
§ LORD WINDLESHAMMy Lords, the noble Lord, Lord O'Hagan, speaks with great experience as a member of the European Parliament, but he is going a great deal wider than the Question on the Order Paper. If he would like to put down another Question I should be happy to answer it.