The UK must stop turning ‘a blind eye’ to its shameful role in tax avoidance, Christian Aid has warned, after a trio of UK Overseas Territories topped a new index ranking countries by their complicity in global corporate tax havenry.
Launched today, the ‘Corporate Tax Haven Index’ is a new country ranking developed by Tax Justice Network: it is the first-ever study of its size and scope.
The three top ranking jurisdictions on the list are all UK Overseas Territories: British Virgin Islands, Bermuda and the Cayman Islands. The UK itself ranks 13th.
Christian Aid’s Global Lead on Economic Justice, Toby Quantrill, said: “The Corporate Tax Haven Index is a critical piece of work that deepens our understanding of just how broken the global economic system really is. It highlights the role of the UK and its network of Overseas Territories and Crown Dependencies in undermining the ability of other countries, including some of the poorest in the world, to provide for the most basic rights of their citizens.
“By deliberately enabling tax avoidance, and accelerating the race to the bottom, the jurisdictions topping this list of shame are contributing to a lack of vital services across the globe. This is a problem that Christian Aid first highlighted more than 10 years ago, and which has been widely acknowledged, yet remains fundamentally unsolved.”
Mr Quantrill continued: “The UK has helped to set up the system of tax havens identified by the Tax Justice Network and now needs to take a global lead in transforming the system and transforming the way in which corporations are taxed.
“We have to ensure that global corporations are no longer in a position to choose how much, and where, they pay their taxes. Failing to tackle this problem makes a nonsense of any claims by the UK to be leaders in global development.
“We cannot continue to provide aid while turning a blind eye to the problems created in our own back garden. If we want to help tackle extreme poverty, then we must get our own house in order first.”
The Corporate Tax Haven Index scores each country’s tax system based on the degree to which it enables corporate tax avoidance. Each country’s corporate tax haven score is then combined with the scale of corporate activity in the country, to determine the share of global corporate activity put at risk of tax avoidance by the country. The greater the share of global corporate activity jeopardized by the country’s tax system, the higher it ranks on the index.
The Tax Justice Network was responsible for turning the concept of global corruption on its head when it developed the ‘Financial Secrecy Index’, which showed how global criminality and tax dodging was actually being facilitated by countries that appear, on the surface, to be beacons of respectability.