According to a recent study, the UK is the ‘world’s greatest enabler’ of corporate tax avoidance because of its network of satellite jurisdictions, such as the British Virgin Islands, Bermuda and the Cayman Islands.
The British Virgin Islands tops the list, closely followed by Bermuda and the Cayman Islands, and these are all British overseas territories. Meanwhile, the British dependency of Jersey comes in at number seven. Other countries in the top 10 are the Netherlands, Switzerland, Luxembourg and Singapore. The Bahamas, which is a British Commonwealth territory, is at number nine, and Hong Kong is at number 10.
As the report by the Tax Justice Network points out, while tax evasion is illegal, corporations can reduce their bills by moving profits through countries or territories with lower taxes. The lowest available corporate tax rates in the top 10 countries average 0.54 per cent.
According to the study, the UK is responsible for a great deal of the “breakdown of the global corporate tax system”, as it accounts for over a third of the world’s corporate tax avoidance risks. This is four times more than the next greatest contributor of corporate tax avoidance risks, the Netherlands, which accounts for less than seven per cent.
However, a spokesman for the Government said that tackling tax avoidance was a priority, adding that the UK had “been at the forefront of international action to reform global tax rules.”
Rob Chedzoy, Tax Partner at Milsted Langdon, said: “These figures show that corporate tax avoidance is a serious issue in the UK. It’s important to make the distinction between avoidance and evasion, the latter of which is illegal, but the fact that British overseas territories are also at the top of the list shows that this is a wider problem.
“For advice on issues regarding tax, contact one of our experts today.”