UK Companies Over-Use Tax Havens
LONDON – Almost all of the UK’s largest companies have subsidiaries in tax havens, and the active use of offshore structures may be depleting the tax revenues in developing countries around the world.
In a press release issued on May 12th the international charity group ActionAid struck out at businesses listed on the FTSE 100 for their widespread use of offshore subsidiaries, claiming that “…tax havens remain a key link in the chain that lets multinational companies and wealthy individuals drain billions from poor countries.”
According to ActionAid, 98 of the the UK’s biggest companies now have subsidiaries registered in countries considered to be tax havens.
The large companies currently have approximately 22 000 subsidiaries registered outside of the UK, and nearly 40 percent of these entities are located in tax haven jurisdictions.
ActionAid claims that 78 of the companies listed on the FTSE 100 are now operating in developing countries across the world, and each of these businesses utilizes offshore subsidiaries.
The charity group conceded that the use of subsidiaries in tax havens is not proof of tax evasion or tax avoidance, but stated that the “…findings highlight the extent of multinationals’ operations in jurisdictions that can provide substantial tax advantages and help obscure information.”
Commenting on the findings and the impact of tax havens on developing countries, the tax policy adviser for ActionAid Mike Lewis said that “…fragile public revenues in some of the world’s poorest countries are being fatally undermined through corporate profit-shifting and other transactions through tax havens,” and “…Stopping wealth being siphoned out of the poorest countries into tax havens is one of the most urgent tasks in the fight against hunger.”
Photo by Wen-Yan King