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Published on October 11th, 2011 | by Lorna Gledhill
Image © [caption id="attachment_4132" align="alignleft" width="240" caption="Tax haven protest in Jersey (c) Ryan Morrison"]Tax haven protest in Jersey [/caption] A new report by the campaigning group Action Aid has revealed that 98 companies out of the FTSE 100 group have subsidiary companies located in jurisdictions known as tax havens. In total, around a quarter (8, 492) of the subsidiary companies of these organizations have their addresses listed in countries well known for their low, or non-existent, taxes. Whilst this data cannot prove tax avoidance, it is a clear indicator of the freedom that companies have to navigate regulation. Tax havens are not only popular due to their minimal taxes but also because of ‘secrecy jurisdictions’, which manage to create a veil of secrecy around the cross-border transactions of each company. Perhaps the most telling example in the damning report is that of Delaware, a state that covers less than 2,000 square miles. Two-thirds of the FTSE companies that are registered in the whole of the US are located in this tiny state, with many listed at one single address. Put succinctly by Action Aid, “the state’s favourable tax regime and limited disclosure regime must surely play a part.” Unsurprisingly, banks, oil companies and mining industries seem to have the highest number of subsidiary companies located in tax havens; the UK’s ‘big four’ banks – RBS, Barclays, HSBC and Lloyds Group – dominate those located in the Cayman Islands. Perhaps the biggest shock seems to be that all of the main UK supermarkets are using tax haven structures. The Action Aid report estimates that the financial losses incurred to the government due to tax evasion could exceed £18 billion. This is a fact not overlooked by the campaigning group, UKUncut, who have been responsible for a variety of non-violent demonstrations aiming to bring the issue of tax evasion to the forefront of arguments about the legitimacy of government cuts. They claim that by collecting the tax dodged by the “super-rich”, the coalition would no longer be in a financial situation that requires such drastic reductions in public services. According to their figures, the evaded taxes of Sir Philip Green’s Arcadia group would pay the salaries of 20,000 NHS nurses. Unfortunately, it looks unlikely that the current government will crack down on the availability and temptation of tax havens. David Cameron seemed to make his position quite clear when he appointed Sir Philip Green to carry out an efficiency review of government spending in 2010. Equally, today’s report noted that the last budget saw the government give banking and finance companies a tax break worth £80 million per year when it changed the way their foreign branches were taxed. Jobs have also been cut at HM Revenue & Customs and despite promising statements from Vince Cable, little seems to have been done to punish offending organisations. Action Aid has called for three key responses: greater company responsibility; corporate transparency; and an end to the secrecy of tax havens. Currently, the companies that dominate our high streets also seem to be holding sway in government. Unless the coalition cuts its ties with profit-hungry business, the British public will continue to be footing the bill.

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Tax havens used by 98 of the FTSE 100: who’s footing the bill?

Tax haven protest in Jersey

Tax haven protest in Jersey (c) Ryan Morrison

A new report by the campaigning group Action Aid has revealed that 98 companies out of the FTSE 100 group have subsidiary companies located in jurisdictions known as tax havens. In total, around a quarter (8, 492) of the subsidiary companies of these organizations have their addresses listed in countries well known for their low, or non-existent, taxes.

Whilst this data cannot prove tax avoidance, it is a clear indicator of the freedom that companies have to navigate regulation. Tax havens are not only popular due to their minimal taxes but also because of ‘secrecy jurisdictions’, which manage to create a veil of secrecy around the cross-border transactions of each company.

Perhaps the most telling example in the damning report is that of Delaware, a state that covers less than 2,000 square miles. Two-thirds of the FTSE companies that are registered in the whole of the US are located in this tiny state, with many listed at one single address. Put succinctly by Action Aid, “the state’s favourable tax regime and limited disclosure regime must surely play a part.”

Unsurprisingly, banks, oil companies and mining industries seem to have the highest number of subsidiary companies located in tax havens; the UK’s ‘big four’ banks – RBS, Barclays, HSBC and Lloyds Group – dominate those located in the Cayman Islands. Perhaps the biggest shock seems to be that all of the main UK supermarkets are using tax haven structures.

The Action Aid report estimates that the financial losses incurred to the government due to tax evasion could exceed £18 billion. This is a fact not overlooked by the campaigning group, UKUncut, who have been responsible for a variety of non-violent demonstrations aiming to bring the issue of tax evasion to the forefront of arguments about the legitimacy of government cuts. They claim that by collecting the tax dodged by the “super-rich”, the coalition would no longer be in a financial situation that requires such drastic reductions in public services. According to their figures, the evaded taxes of Sir Philip Green’s Arcadia group would pay the salaries of 20,000 NHS nurses.

Unfortunately, it looks unlikely that the current government will crack down on the availability and temptation of tax havens. David Cameron seemed to make his position quite clear when he appointed Sir Philip Green to carry out an efficiency review of government spending in 2010. Equally, today’s report noted that the last budget saw the government give banking and finance companies a tax break worth £80 million per year when it changed the way their foreign branches were taxed. Jobs have also been cut at HM Revenue & Customs and despite promising statements from Vince Cable, little seems to have been done to punish offending organisations.

Action Aid has called for three key responses: greater company responsibility; corporate transparency; and an end to the secrecy of tax havens. Currently, the companies that dominate our high streets also seem to be holding sway in government. Unless the coalition cuts its ties with profit-hungry business, the British public will continue to be footing the bill.

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