International News

By Tom Bergin

LONDON (Reuters) - The opposition Labour party, tapping into widening public anger over corporate tax avoidance, wants the government to push for new international rules to force companies to report profit and tax payments country-by-country.

Campaigners say the move, which is receiving increased support internationally despite strong opposition from business, would deter companies from shifting profit into tax havens where they have no staff or sales.

Prime Minister David Cameron has said corporate tax avoidance will be discussed at the annual summit of the Group of Eight leading industrial economies, which Britain is hosting next month in Northern Ireland.

He has urged companies to be more transparent but has only proposed voluntary measures.

Companies say country-by-country reporting would impose unreasonable administrative burdens.

But campaigners say firms fear being embarrassed by highlighting how they frequently pay low or no taxes in countries where they have big sales and how they report big profits in tax havens.

The standard could also lead to companies revealing that they earned no money in countries where they told investors they operated profitably.

Coffee chain Starbucks received broad political, media and public criticism in Britain last year after a Reuters investigation showed it assured investors the United Kingdom was a profitable market after telling tax authorities its operations lost money.

The European Union agreed earlier this year to force European banks to report profit on a country-by-country basis as part of measures to ensure they hold enough capital.

The U.S. and EU have also agreed measures to force companies in the extractive industries to publish tax and other payments to resource-rich nations, to reduce corruption.

Labour on Sunday issued a new policy document on corporate tax reform which backed forcing companies to publish figures on revenues, profit and taxes in each country that they operate.

Ernst & Young, one of the 'big four' accounting firms which audit most of the big multinational companies, has warned clients that country-by-country reporting may become a global standard unless they come up with an alternative.

Britain's CBI business lobby group has urged businesses to publish "narrative" reports explaining their tax affairs to the public.

A committee of UK MPs has accused Google Inc of "unethical behaviour" for avoiding tax by shifting profit from UK sales to an untaxed unit in Bermuda.

Google says it complies with tax rules in every country where it operates.

(Editing by David Cowell)