FRANKFURT: Britain’s offshore territories the British Virgin Islands (BVI), Bermuda and the Cayman Islands were named in a study released on Wednesday as the most significant jurisdictions used by global companies to minimise their tax bills.
Governments are stepping up efforts to recoup more tax from multinationals, with the European Commission forcing iPhone maker Apple to repay 13 billion euros after it used Ireland to cut its tax on European profits to almost zero.
The Tax Justice Network, a group campaigning for transparency, said its study measured multinational activity in each country in 2017, as well as tax rates and loopholes.
While tax evasion is illegal, companies are not forbidden from reducing their bills by taking advantage of loopholes such as moving profits through countries or territories that impose lower taxes, including those with close legal ties to Britain.
A British government spokesman said tackling tax avoidance was a priority and that the country had “been at the forefront of international action to reform global tax rules”.
British overseas territories were committed to tax transparency standards, the spokesman added. Andy Burrows, CEO of Bermuda’s Business Development Agency, said it met global standards. “Bermuda is not a place to hide capital,” he added.
John Christensen of the Tax Justice Network said the findings showed why Britain should not compete more aggressively on tax, as some politicians have suggested it could after it leaves the European Union.
“This (low tax) model would involve ... engaging in a race-to-the-bottom on corporate tax rates,” he said.
Officials from more than 100 countries, including Britain, India and the United States are gathering this week under the umbrella of the Organisation for Economic Cooperation and Development, which sets tax standards, to discuss reform.
Published in Dawn, May 29th, 2019