- June 3, 2019
A new tax ranking system is breaking down the walls between those countries accused of being tax havens and those that have vehemently worked to eradicate the business of hiding ledgers in low to no tax jurisdictions. But the article that accompanied the Tax Justice Network’s new Corporate Tax Haven Index, not only exposed its findings for the top ten “most corrosive” tax havens in the world, it also set its sights on the accusers, who it says have traditionally operated as tax havens themselves.
The base of the accusatory pointed-finger begins at UK controlled territories and commonwealth jurisdictions, and focuses sharply on the UK itself. The Tax Justice Network calls out the UK as “bearing the lion’s share of responsibility, through its controlled network of satellite jurisdictions”, for breaking down the global corporate tax system.
The UK ranks 13th on the Network’s index, but some of its territories, such as British Virgin Islands, Bermuda, the Cayman Islands and Jersey are part of the index’s top 10, with the first three aforementioned jurisdictions topping the list. And they all rank higher than The Bahamas, a British Commonwealth territory, which falls ninth.
The article goes on to explain that about “14 percent 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 per cent.” The authors of the scathing article come to the conclusion that the UK’s complicity in corporate tax avoidance measure more than one third of the net world’s corporate tax avoidance risk.
But even as the global financial services and international financial centers’ (tax havens) watchdogs threaten the collapse of industries in small island economies like The Bahamas, Cayman, and British Virgin Islands through the use of blacklisting, the UK is curiously left off these lists. It appears the Tax Justice Network finds this a curious disposition of those watchdog bodies like the European Union (EU) and Organization for Economic Cooperation and Development, because it dedicates space in its article to point out the “hypocrisy” of the EU.The Netherlands and Switzerland find themselves on the Network’s top ten “most corrosive” tax havens list at number four and five, respectively. Yet the Network has also developed a list of the top ten accusatory nations and there, those nations fall at the same points on that list. The United Kingdom also shows up as number two on the list.
The Tax Justice Network says of this hypocrisy:
“The Corporate Tax Haven Index documents the sobering hypocrisy of the European Union. Excluding the UK, the EU is responsible for over a third (35 per cent) of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index.”
The Netherlands has even gone so far as to create its own blacklist recently, threatening some of the countries that are now its neighbors on the Network's scathing list. The Network’s study of jurisdictions is a sobering reminder that what is good for the goose, is not always good for the gander. And that in the game of global superpowers versus small developing island nations (in most cases), it seems to be okay for the pot to call out the kettle’s blackness.
Source: https://corporatetaxhavenindex.org/