UK Tax Haven: Five Big Investment Banks Paid No Corporation Tax in 2014
The British government is facing a credibility crisis over its pledge to ensure multinational corporations pay their fair share of tax, after it was revealed that five of the world’s largest investment banks paid no corporation tax in Britain last year, despite making billions in profits.
Analysis of the banks’ UK operations undertaken by Reuters found that JP Morgan, Bank of America Merrill Lynch, Deutsche Bank AG, Nomura Holding and Morgan Stanley paid no corporation tax in 2014.
The analysis also showed how an additional two banks — Goldman Sachs and UBS AG — used tax breaks and loopholes to significantly reduce their British tax bills.
All up, the seven banks in question paid just US$31 million (£21m) in corporation tax in 2014, despite generating revenues of US$31 billion (£21bn) in the UK, profits of US$5.3 billion (£3.6 bn) and hiring 33,000 staff.
To get around tax loopholes some of the banks recorded losses on their UK operations, but reported to have made profits in countries with more relaxed tax rules.
The figures became available following a 2013 European Union banking law that requires banks to publish country-by-country profit and tax breakdowns.
Questions Over UK Tax Credibility
Although the UK government has said it is leading the international crackdown on tax evasion, the findings are sure to reignite the debate over how large corporations with billions of dollars of profits can evade tax in countries like Britain.
The ruling Conservative party has been accused in the past of not being tough enough in ensuring large multinational corporations pay their fair share of tax.
Opposition MPs and tax campaigners said it was wrong that big banks could get away with paying little or no tax, particularly given the amount of state support they received during the global financial crisis.
“The tax receipts from these large financial institutions show what a charade their claim to pay their fair share has become,” Labour MP John Mann, who also serves on the Treasury Select Committee, said.
“They rely on the taxpayer to underwrite their risk, yet they pay a minimal return back to the Exchequer,” Mann said.
The banks and Britain’s tax authority, Her Majesty’s Revenue and Customers (HMRC), have all declined to comment on the findings, however in defense of the investment banks, industry groups say that banks to contribute to the public purse by generating significant amounts of income tax.