U.K. to Bar Tax-Avoiding Firms From Government Contracts

The U.K. government will block companies with a history of breaking tax rules from government contracts, Chief Secretary to the Treasury Danny Alexander said.

Under proposals published in London today, companies bidding for contracts starting on April 1 will have to make a declaration about their tax compliance and departments will for the first time have the power to refuse contracts on the grounds a company has broken anti-avoidance rules.

Lawmakers have questioned companies including Starbucks Corp., Google Inc. and Amazon.com Inc. about why they pay relatively low tax on their U.K. income. The government, which is lowering the level of corporation tax, is looking for ways to encourage payment.

“The government is clear that aggressive tax avoidance is totally unacceptable,” Alexander said in an e-mailed statement. “These new rules are another significant tool as they will enable government departments to say no to firms bidding for government contracts where they have been involved in failed tax avoidance.”