Bermuda is world’s worst corporate tax haven, says Oxfam
Four UK territories in list ‘undermine Britain’s efforts to be responsible member of the international community’
Bermuda is the world’s worst corporate tax haven, according to a list by Oxfam, which includes three other UK territories among those it names and shames.
The charity’s list of the “world’s worst” 15 tax havens includes the Cayman Islands, Jersey and the British Virgin Islands, which, like Bermuda, are under the sovereignty of the UK. It warned that allowing these territories to act as tax havens “undermines Britain’s efforts to be an outward-facing, responsible member of the international community”.
To compile the list, Oxfam looked at practices such as offering unfair and unproductive tax incentives and zero or extremely low corporate tax rates, as well as failure to co-operate with international processes to combat tax avoidance.
Earlier this year, the charity said that British overseas territories such as Bermuda were popular with US firms seeking to slash their tax bill by “profit-shifting”. In 2012, it found US firms had reported $80bn (£64bn) of profit in Bermuda, more than their combined reported profits in Japan, China, Germany and France.
It said that though these practices, tax havens were distorting the global economy and depriving other governments of much-needed resources. The pressure to compete by offering tax incentives to multinationals costs developing countries $138bn annually, it said.
Ana Arendar, Oxfam’s head of inequality, said: “Tax dodging isn’t an abstract accounting game – the lost revenue has devastating consequences for the world’s poorest people who miss out on life-saving medicines and the chance to go to school.”
The government of Bermuda said there were “substantial errors” in Oxfam’s report. It disputed claims that there were “anonymous shell corporations” on the island, and said that it cooperated with international attempts to combat tax avoidance.
Its deputy premier and minister of finance, Everard Richards, said in a statement: “The government of Bermuda notes with surprise and disappointment statements by Oxfam concerning tax and transparency in which Bermuda has been wrongly included.”
He added: “We have a leading role in supporting global property/catastrophe and other insurance, which directly benefits many of the ‘poorest people’ to which Oxfam refers, as well as providing employment in many economies beyond our shores, including the UK.”
In October Theresa May, the prime minister, pledged to “come after” the accountants, financial advisers and middlemen who help tax dodgers avoid paying what they owe to society.
However, Arendar said: “Allowing our overseas territories and Crown dependencies to operate as tax havens undermines Britain’s efforts to be an outward-facing, responsible member of the international community. It’s time to end this embarrassing contradiction in our own backyard.”
UK corporation tax is due to fall to 17% by 2020 from its current level of 20%, and the prime minister has suggested there could be further cuts to attract businesses. Oxfam warned that governments that cut corporate tax balance their books by reducing public spending or by raising taxes such as VAT that fall disproportionately on the poorest.