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Tightening on eligibility

Companies facing crackdown on government support

Richard Leonard

Richard Leonard: ‘We cannot go back to business as usual’ (pic: Terry Murden)

Companies operating in Scotland which are registered in overseas tax havens must not receive financial support from the Scottish Government, say opposition MSPs.

Scottish Labour will be supporting an amendment to the coronavirus emergency legislation proposed by the Green Party leader Patrick Harvie which would see the Government follow the example of the Labour-led Welsh Government.

Scottish Labour leader Richard Leonard said: “We cannot go back to ‘business as usual’ after this pandemic and by taking this principled stance the Scottish Government can state clearly that the days of the state bankrolling tax-dodging companies at the expense of the domestic economy are over.

“By only providing support to companies that pay appropriate levels of tax, the Scottish Government can ensure that the money to support Scotland’s economy stays in Scotland and that businesses that operate ethically are incentivised.

The move is part of wider attempts to tighten the rules around which firms should be eligible for taxpayer support to compensate for the effects of the coronavirus.

The UK Government may ban dividends being paid by companies which take out taxpayer-backed loans. 

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Firms which borrow up to £200m under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) could be prevented from doling out payouts to investors, Sky News reported. 

Ministers are also considering limiting executive pay and bonuses at these companies. 

The measures would reflect the Cabinet’s desire to prevent taxpayer-backed survival loans being used to line the pockets of fat-cat bosses. 

But the action is opposed by those who say this will cause harm to savers and pensioners who rely on dividends for their income.

Savers are already set to lose out on billions of pounds as global dividends plunge by up to 35%. 

With Burberry preparing to become the latest to slash its payout this week, total dividends from companies around the world will tumble by as much as £414 billion, according to Janus Henderson’s Global Dividend Index. 

This would leave global shareholders will sharing £771 billion against £1.18 trillion in 2019.

All of the big UK banks, several insurers, and energy companies are among those which have already cut payouts. 

In total, more than 320 London-listed companies have axed dividends worth £30 billion, according to analysis from AJ Bell. 

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