Daily Management Review

UK activists publish offshore rating, find the "axis of tax evasion"


The British non-governmental organization Tax Justice Network (TJN), acting “for fair taxation”, presented the Corporate Tax Haven Index. The paper rates countries by possibilities of tax evasion in corporate law. The top lines are occupied by UK crown dependencies and overseas territories (CDOT).

Patrick Cannon
Patrick Cannon
TJN argues that the budgets of states around the world each year receive less than $ 500 billion in taxes due to offshore companies, and this figure is constantly growing. The report's authors believe that transnational corporations, reducing tax costs, "live at someone else's expense, at the expense of taxes that other people pay." Social workers see the main problem in the readiness of many countries and territories to “get involved in the race of discounts and benefits” in order to get profitable corporate residents.

The new rating includes 64 states and territories. 20 indicators were used to assess them, including minimum tax rates and willingness to reduce them, existing loopholes in laws, transparency of tax laws, reporting requirements for companies, etc. In addition, each country's share in the total foreign direct investment was taken into account.

The top 10 rankings includes several UK crown dependencies, overseas territories or states belonging to the Commonwealth: the British Virgin Islands ranked first, Bermuda ranked second, the Cayman Islands ranked third, Jersey - seventh and the Bahamas - ninth.

In addition to them, the top ten included the Netherlands (4th place), Switzerland (5th), Luxembourg (6th), Singapore (8th) and Hong Kong (10th). The average minimum corporate income tax in the top ten countries is only 0.54%.

The UK itself ranks 13th in the rankings. But, the TJN noted, if we add the UK figures to figures of CDOT, it would be on the first place in the list. Therefore, the authors called the UK "the main accomplice of corporate tax evasion."

TJN also called Britain, the Netherlands, Switzerland and Luxembourg the "axis of tax evasion." According to the organization, this axis “fills the pockets with funds necessary for the sustainable development of mankind”.

The rating also includes several largest economies in the world: there are China (19th place), France (22nd), Germany (24th) and USA (25th). 

The TJN states that “the international tax system, developed almost a century ago, is not suitable for the modern world. And it is necessary “not to patch the constantly forming holes in it, but to create a new philosophy of international taxation”.

In particular, the organization proposes using unitary taxation, in which a multinational corporation is considered as a single global structure and is taxed on the basis of the total amount of profit received by it worldwide, taking into account share of a particular country in the general operations of a corporation. Then, according to TJN, tax havens will simply disappear from the world taxation system.

At that, public activists admit that this system "has its own difficulties and weak points, as well as political obstacles to its implementation, taking into account selfish interests of those who have benefited from the current non-working system."

source: corporatetaxhavenindex.org