UK Could Raise £16bn with Unused Anti-Corporate Tax Transparency Power

In a notable fiscal decision, the UK government plans to raise £12 billion from 2029 to 2031 by freezing workers’ income tax rates, as outlined in the 2025 Budget Statement. However, an alternative approach could have been taken to generate this revenue through an existing anti-tax evasion measure that remains unused since its implementation in 2016.

The transparency initiative would compel multinational corporations to adhere to the same transparency standards as local UK businesses. This action could prevent the loss of one-fourth of the annual corporate taxes currently lost to tax havens, potentially generating £16 billion for the UK within the same period.¹

The £16 billion revenue from this transparency measure would not only surpass the anticipated £12 billion from the income tax freeze but also cover the expected revenues from cuts to the Motability scheme and a new per-mile charge on electric vehicles.² An additional £5 billion could be accrued annually if the UK utilizes this measure starting now.

Expert Opinions on Missed Opportunities

Alex Cobham, CEO at the Tax Justice Network, emphasized:

“The Finance Act 2016 didn’t close the profit shifting door, but it did add a security camera so that corporations can’t use the door without the public seeing. The research shows multinational corporations use the door less often when they know they’re being watched – reducing their profit shifting by 28%, which translates into a lot of tax revenue. But the UK government is choosing to keep the camera off, even though turning it on would bring in more tax than the extended income tax freeze.”

Faiza Shaheen, Executive Director at Tax Justice UK, remarked:

“Every Budget is about choices, and the Chancellor chose to ask ordinary people to pay more tax, rather than multinational corporations making enormous profits or the super-rich. If the government had truly used every lever they had available, they’d have worked with the tools at their disposal to recover billions in tax revenue from corporations who’ve been able to shift their profits into tax havens.”

Comparative Global Measures

This year, Australia and the European Union have commenced using a method known as public country by country reporting, which aims to recoup billions from multinationals exploiting tax havens. Despite the UK being the pioneer in legislating this measure in the Finance Act 2016, it remains unexercised, missing an estimated £28 billion in potential revenue since its adoption.

Public country by country reporting mandates that multinational corporations disclose their profits in each operating country publicly. This transparency enables tracking of profit shifts into tax havens. A precedent was set in 2014 when European banks were required to release such reports, leading to a reduction in profit shifting by over 25%.³

Since 2016, multinational corporations have been submitting their country by country reports to governments under an international standard, albeit in an anonymized format. This anonymization, influenced by corporate lobbying, limits the public’s ability to identify the corporations involved, thus diminishing the deterrent effect of the transparency measure.⁴

Globally, countries lose approximately US$348 billion annually due to tax haven usage by multinationals, with the UK alone losing £12.5 billion in 2021.⁵ The Tax Justice Network suggests that non-anonymized public reporting could have saved US$475 billion from 2016 to 2021.⁶

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Notes to editor

1. See the estimates on how much tax the UK could recover annually here. Estimates are based on the Tax Justice Network’s research on how much tax countries can recover by implementing public country by country reporting, with extrapolation into the near future matching the period covered by the Budget Statement 2025.
2. The UK government is expected to raise £1 billion over the next five years from cuts to the Motability scheme, and raise £3 billion from a per-mile levy on electric vehicles.
3. See the Tax Justice Network’s methodology for calculating how much tax could be recovered with public by country reporting.
4. Governments started receiving detailed reports from multinational corporations – known as country by country reporting – in 2016 on where they are booking profits, exposing those booking their profits in tax havens and revealing how much they are cheating on tax by. The reports, required by an international standard introduced by the OECD in 2015 and first championed by the Tax Justice Network in 2003, were meant to be published publicly to serve as a deterrent but corporate lobbying successfully required the data to be anonymised after it is collected by governments and before it is made public. The standard barred any government from making the data public in any non-anonymised form. The anonymised version of the reports make it possible for the public to see how much corporate tax is being underpaid, but impossible to identify the multinational corporations doing the cheating, hence removing the deterrence effect of the transparency measure.
5. See the State of Tax Justice 2024 for more information.
6. See the State of Tax Justice 2025 for more information.