Tax Havens in British Indian Ocean Territory Top Global List, Report Finds

Introduction

A recent report by the Tax Justice Network has ranked Britain’s overseas territories as the world’s most significant tax havens. The British Virgin Islands topped the list, followed closely by the Cayman Islands and Bermuda. These British overseas territories were found to be the “greatest enablers of corporate tax abuse”, allowing multinational corporations to significantly reduce their tax bills.

UK’s Overseas Territories Ranked Top

The report highlights that Britain itself was ranked 13th on the list, alongside its network of satellite territories. The UK was singled out for providing the widest scope for international corporations to cut their tax bills.

UK’s Role in Enabling Corporate Tax Abuse

• Provides the widest scope for international corporations to cut their tax bills
• Ranks 13th on the list, alongside its network of satellite territories

UAE Enters Top 10 List

The United Arab Emirates (UAE) has emerged as a new entry into the top 10, with an investigation revealing it had benefited from $250 billion in multinational funds routed through the Netherlands. This has led to South Africa being highlighted as one of the biggest losers from firms shifting profits to the low-tax UAE.

Impact on Developing Countries

• South Africa is one of the biggest losers from firms shifting profits to the low-tax UAE
• Developing countries like South Africa are disproportionately affected by corporate tax abuse

Tax Justice Network’s Criticism of OECD

Tax Justice Network spokespersons claim that tax havens are thriving and efforts by the Paris-based Organisation for Economic Co-operation and Development (OECD) have failed to tackle the problem. They argue that the biggest economies in the world are helping companies avoid $245 billion in tax, and that trust in the OECD is misplaced.

Tax Justice Network’s Demands

• The United Nations should take over the role of fostering global tax rules
• OECD countries are responsible for 39% of corporate tax abuse risks, while their territories and former colonies account for 29%
• “Not harmful” jurisdictions are responsible for 98% of world’s corporate tax abuse risks

OECD’s Response

OECD director Pascal Saint-Amans countered that the report failed to recognize progress made in recent years to share tax information and clamp down on abuses. He pointed to an agreement involving 500,000 people declaring their income and paying back-taxes and fines, as well as a deal to set a minimum tax rate for digital services.

OECD’s Achievements

• Agreement involving 500,000 people declaring their income and paying back-taxes and fines
• Deal to set a minimum tax rate for digital services

Top 10 Biggest Enablers of Global Corporate Tax Abuse

1. British Virgin Islands (British overseas territory)
2. Cayman Islands (British overseas territory)
3. Bermuda (British overseas territory)
4. Netherlands
5. Switzerland
6. Luxembourg
7. Hong Kong
8. Jersey (British crown dependency)
9. Singapore
10. United Arab Emirates

Note: The report by the Tax Justice Network is available online for further reading and reference.