British territories among some of the world's top tax havens, says Oxfam

As two PricewaterhouseCooper employees who exposed favourable tax deals Luxembourg made with about 340 multinationals begin their appeal on Monday, Oxfam has labelled the Grand Duchy along with Bermuda, the Netherlands and Ireland as some of the world’s top tax havens.

Antoine Deltour and Raphael Halet were found guilty in the ‘Lux Leak’ case in June and were handed 12 and nine months suspended sentences respectively, for blowing the whistle in 2014 on deals negotiated by tax authorities in Luxembourg that enabled multinationals to dodge millions of dollars in tax. Oxfam has called for the whistle-blowers to be protected, not prosecuted.

Oxfam said that Luxembourg is the seventh worst corporate tax haven, and according to Eurodad, an NGO, the country had 519 deals in force in 2015, up from 172 in 2014, the year the scandal broke.

The charity compiled the list by assessing the extent to which countries employ damaging tax policies, such as zero corporate tax rates, the provision of unfair and unproductive tax incentives, and lack of co-operation with measures against tax avoidance.

Bermuda, a British territory, topped the list, followed by the Cayman Islands, another British territory, then the Netherlands, Switzerland, Singapore and Ireland.

Esme Berkhout, tax policy advisor for Oxfam said: “Corporate tax havens are helping big business cheat countries out of billions of dollars every year. They are propping up a dangerously unequal economic system that is leaving millions of people with few opportunities for a better life.”

Ireland has been implicated with an alleged sweetheart deal with technology giant Apple to pay 0.005% corporate tax, while the British Virgin Islands was home to more than half of the 200,000 offshore companies set up by law firm Mossack Fonseca, exposed in the ‘Panama Papers’ scandal.

Sweetheart tax deals cost the EU up to €70bn a year in lost tax revenue, while Oxfam claims that tax dodging costs poor countries at least $100bn a year.

Berkhout said: “There are no winners in the race to the bottom on corporate tax. Ordinary people – particularly the poorest – are paying the price for this reckless competition through increases in personal taxes and cuts to essential services, such as healthcare and education. Governments must work together to stop this crazy race to the bottom on corporate tax and ensure companies pay their fair share.”

One way to encourage investment in a country is to cut corporation tax, and according to the Oxford University centre for business taxation the average corporate tax rate across G20 countries is less than 30% today, down from 40% 25 years ago.

British companies pay 20% of their profits on corporation tax and that is expected to fall to 19% in April next year and 17% in April 2020. Corporation tax is not the only tax that companies pay.

The charity said it is calling on governments to “stop unfair and unproductive tax incentives and work together to set corporate tax at a level that is fair, progressive and contributes to the collective good”, and “ensure tax blacklists are based on objective, comprehensive criteria including whether or not a country offers zero rates of corporate tax”.

It also wants governments to “improve tax transparency by requiring all multinational companies to publish financial reports for every country in which they operate, so it is clear what taxes companies are paying and where.”

The top 15 tax havens, according to Oxfam:

1. Bermuda

2. the Cayman Islands

3. the Netherlands

4. Switzerland

5. Singapore

6. Ireland

7. Luxembourg

8. Curacao

9. Hong Kong

10. Cyprus

11. Bahamas

12. Jersey

13. Barbados

14. Mauritius

15. the British Virgin Islands