Britain is blamed for enabling most of the world’s $500 billion a year corporate tax dodging, following a probe by financial experts.
The Tax Justice Network places Britain at the heart of the Corporate Tax Haven Index.
In the report, the network blames the UK and linked offshore financial jurisdictions for the breakdown of the global tax system.
The top 10 financial disruptors, according to the network, are:
- British Virgin Islands (British territory)
- Bermuda (British territory)
- Cayman Islands (British territory)
- Jersey (British dependency)
- Hong Kong
Britain ranks 13thon the list.
Of the 10 jurisdictions whose tax systems received the highest corporate tax haven scores for enabling corporate tax avoidance, eight are linked to the UK: the British Virgin Islands, Bermuda, the Cayman Islands, the Isle of Man, Turks and Caicos, Anguilla, Jersey, and Guernsey.
UK single-handedly breaks tax system
“The UK with its corporate tax haven network is by far the world’s greatest enabler of corporate tax avoidance and has single-handedly done the most to break down the global corporate tax system, accounting for over a third of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index,” said a spokesman for the tax network.
“That’s four times more than the next greatest contributor of corporate tax avoidance risks, the Netherlands, which accounts for less than 7%.
“Nearly 14% of foreign direct investment reported by the International Monetary Fund – over $6 trillion – is booked in the UK network, where the lowest available corporate tax rates averaged 1.73%.
A British government spokesman said tackling tax avoidance was a priority and the UK had “been at the forefront of international action to reform global tax rules”.
World tax war
Tax Justice Network chief executive Alex Cobham said a few rich countries waged a world tax war “so corrosive it had broken the global corporate tax system beyond repair”.
“The UK, Netherlands, Switzerland and Luxembourg line their pockets at the expense of a crucial funding stream for sustainable human progress. The ability of governments across the world to tax multinational corporations to pay teachers’ wages, build hospitals and ensure a level playing field for local businesses has been deliberately and ruthlessly undermined.”
He also urged governments to tax multinational companies where their economic activity was located, not where their accounting and administration was carried out.