Tax havens accuse US of ‘hypocrisy’ over tax avoidance
A group of tax havens have accused larger countries like the United States of “hypocrisy” when it comes to cracking down on tax avoidance.
With the issue of offshore finance high on the agenda in light of the fall out from the so-called Panama Papers scandal, world leaders convened in London on Thursday to agree new measures to take on the issue.
At the summit, world leaders from six countries – Britain, Afghanistan, Kenya, France, the Netherlands and Nigeria – agreed to publish registers of so-called “beneficial ownership”. These lists help authorities identify who really owns companies and to crack down on tax avoidance.
But offshore havens such as the Isle of Man, Cayman Islands, and Bermuda criticised larger countries – notably the US – for asking them to sign up to public registers of beneficial ownership when they held themselves to lower standards.
The tiny US state of Delaware is in particular notorious for hosting US corporations that are physically headquatered in other states.
The state, which has a population of under a million people, has very few taxes and a significant proportion of its public budget – over a quarter – is raised from incorporation fees.
Companies listed there benefit from significant tax advantages compared to more developed areas which have raised taxes to fund the infrastructure that makes business possible.
Alden McLaughlin, premier of the Cayman Islands, accused the larger countries of deploying “rhetoric” but taking little action themselves.
“It is time to put behind us the shades of hypocrisy that have been part and parcel of this discussion for years and years,” he said.
“There is little point in us continuing the rhetoric if we are going to continue to allow major countries to remain outside the standard.”
Bob Richards, deputy premier of Bermuda, said that UK and the US had also built favourable tax climates.
“There are more billionaires per head of population in Britain than anywhere else and that’s not because of the climate, it’s because of the tax climate,” he argued.
Allan Bell, chief minister of the Isle of Man, additionally told the Financial Times newspaper: “Where I get angry is the hypocrisy of the US in particular, which has been preaching to the world about the importance of access to information relevant to the US, but they themselves have not been moving at the same pace
Offshore finance was just one of the issues discussed at this week’s summit, which was about corruption in general.
Downing Street said the new register to be implemented in the UK would mean “corrupt individuals and countries will no longer be able to move, launder and hide illicit funds through London’s property market, and will not benefit from our public funds”.