The UK is by far the world’s biggest enabler of corporate tax dodging, helping funnel hundreds of billions of dollars away from state coffers, according to an international investigation.Of the top 10 countries allowing multinationals to avoid paying billions in tax on their profits, four are British overseas territories.
The Tax Justice Network found that the UK has "single-handedly" done the most to break down the global corporate tax system which loses an estimated $500bn (£395bn) to avoidance.
The amount dodged globally each year is more than three times the NHS budget or roughly equivalent to the entire GDP of Belgium. Tax haven territories linked to Britain are responsible for around a third of the world’s corporate tax avoidance risk - more than four times the next greatest contributor, the Netherlands. Topping the list was the British Virgin Islands, followed by Bermuda and the Cayman Islands - all British overseas territories. Jersey, a Crown dependency, was seventh while the UK itself comes in thirteenth. Other countries in the UK network, including Turks and Caicos Islands, Anguilla, the Isle of Man, and Guernsey, also scored highly for allowing corporate tax dodging.
Alex Cobham, chief executive at the Tax Justice Network described the hypocrisy of rich nations which enable tax avoidance UK as “sickening”.
“A handful of the richest countries have waged a world tax war so corrosive, they’ve broken down the global corporate tax system beyond repair," Mr Cobham said. “The UK, Netherlands, Switzerland and Luxembourg – the Axis of Avoidance – line their own pockets at the expense of a crucial funding stream for sustainable human progress. The ability of governments across the world to tax multinational corporations in order to pay teachers’ wages, build hospitals and ensure a level playing field for local businesses has been deliberately and ruthlessly undermined.”
While many of the top 10 tax haven territories are tiny they are home to trillions of dollars of foreign direct investment suggesting that many of these flows may be motivated by reducing tax bills rather than genuine economic activity.