UK overseas territories and Crown dependencies are among the jurisdictions most associated with corporate tax abuse, according to the latest Corporate Tax Haven Index from Tax Justice Network. The organisation estimates that they cost EU member states about €8 billion in lost revenue annually. The updated index also places three EU countries— the Netherlands, Ireland and Luxembourg—among its top ten.
The report estimates for the first time the revenue losses that UK-linked jurisdictions cause in other countries. The British Virgin Islands, Cayman Islands and Bermuda rank first, second and third, accounting respectively for 7%, 6.7% and 5.4% of the corporate tax abuse measured worldwide.
Switzerland ranks fourth, followed by Singapore and Hong Kong. The Netherlands is seventh, Jersey eighth, and Ireland and Luxembourg complete the top ten. Guernsey and the Isle of Man rank 12th and 13th.
Germany and France are the EU countries most affected by UK-linked tax schemes, with estimated annual revenue losses of €2.79 billion and €1.41 billion, respectively. Luxembourg is next, at €570 million, followed by Spain at €475 million. These figures cover losses attributed to the UK-linked jurisdictions; the report also gives broader totals for losses caused by tax havens worldwide.
Tax Justice Network says the UK and its network of tax havens account for 31% of the global risks of corporate tax abuse identified by the index. The report separately estimates that the UK loses around £12.8 billion (€15.3 billion) each year when multinational companies use tax havens around the world to reduce their UK tax bills.
The index assesses the rules and financial activity that can help multinational companies lower their tax bills. Its analysis includes corporate tax provisions, preferential regimes, participation in international anti-avoidance measures and foreign direct investment flows, using International Monetary Fund data.
Tax Justice Network says this focus on multinational companies’ financial activity distinguishes its index from many other tax-haven lists. None of the jurisdictions in its top ten appears on the EU’s list of non-cooperative tax jurisdictions; the British Virgin Islands are included only on the EU’s grey list, for jurisdictions that have committed to reforms.
Moran Harari, who leads the index, said many countries still do not require companies to disclose basic information needed to identify tax abuse. The organisation argues that the lack of significant progress shows the 2021 international agreement on taxing large multinationals is insufficient, particularly after setbacks in later negotiations. It is calling for progress on a United Nations tax convention.
Sources: El País Economía.