Transparency International Calls For End To Tax Relief On Overseas Bribes

by Caroline Maxwell, Tax-News.com, London

11 January 2002

A leading anti-corruption campaign body has come out in criticism of the UK Inland Revenue for allowing British-based multinationals to claim tax relief on bribes offered to foreign officials in developing countries.

Although bribery, in very specific sets of circumstances, is not a criminal offense in the United Kingdom as yet, provisions in the anti-terrorism legislation which comes into force on February 14th, will make it so.

According to a report in yesterday's Financial Times, Britain has been criticised for dragging its feet over outlawing bribes or 'commissions', and Transparency International believes that the fact that the company in question can then claim tax relief on the bribe has served to contribute to this lax approach.

The Inland Revenue has promised that it will look into whether changes need to be made to its guidelines for inspectors, which currently state that bribes are allowable for tax purposes: 'only if they are revenue in character, made wholly and exclusively for the purposes of the trade and...if no part of the bribery whatsoever takes place in the UK'.

The tax authority denied that it was aware of any circumstances in which allowances were currently being claimed for 'commissions'. However, a lawyer, who did not want to be named, told the Financial Times that 'huge amounts' were being allowed to UK companies as tax relief on bribes.

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