British abroad territories are the world’s prime enablers of company tax abuse, in line with a rating by tax advocacy group Tax Justice Community. 

The British Virgin Islands is the territory “most complicit” in serving to multinational companies underpay company revenue tax, adopted by the Cayman Islands and Bermuda, in line with the most recent replace to TJN’s Corporate Tax Haven Index earlier this month. 

“The UK and its community of British tax havens, sometimes called the UK’s ‘second empire,’ at the moment are accountable for a 3rd (33%) of all company tax abuse dangers measured by the index,” a spokesperson for TJN informed CNBC. 

Switzerland ranked quantity 4, adopted by Singapore, Hong Kong and the Netherlands. Quantity eight on the listing is the self-governing dependency of the UK, Jersey, whereas the UK itself got here in at quantity 18. 

TJN estimates that the UK and its British tax havens value different nations an estimated $84 billion in corporate taxes yearly.

Defending themselves in opposition to the fees made by the advocacy group, spokespersons from a few of the governments stated they had been in full compliance with worldwide tax requirements set by the Organisation for Financial Co-operation and Growth. 

The British authorities’s International, Commonwealth and Growth Workplace informed CNBC that the UK has been abiding by the Common Reporting Standard accepted by the OECD in 2014. 

CRS is designed to extend transparency about tax issues on a worldwide scale and permit tax authorities to uncover revenue and belongings held abroad by their taxpayers. 

FCDO informed CNBC it had greater than 100 nations sharing CRS data with them, with over 9.2 million accounts reported in complete, as of the tip of 2022.

The company added that the Crown Dependencies and Abroad Territories had been separate jurisdictions with their very own democratically elected governments accountable for their fiscal affairs.

A spokesperson for BVI Finance, which describes itself as “the voice of the British Virgin Islands’ monetary providers trade,” informed CNBC that the territory adheres to world requirements, participates in world tax transparency initiatives underneath the OECD, and totally cooperates with the UK Authorities and legislation enforcement businesses in sharing “related” data.

Authorities tax departments of the Cayman Islands and Bermuda didn’t reply to CNBC inquiries. 

Based mostly on the OECD requirements for figuring out and isolating nations that allow multinational companies to abuse tax, the British Virgin Islands, the Cayman Islands and Bermuda, are presently rated as “not harmful.”

TJN, which finds requirements such because the CRS as inadequate to take care of tax avoidance and fraud, has endorsed efforts by the United Nations to take over regulation of worldwide tax coverage. 

In August, the UN unveiled a blueprint to develop a common tax accord for inclusive and efficient worldwide tax cooperation.

Broad commitments within the tips embody equitable taxation of multinational enterprises, addressing tax evasion and avoidance by high-net-worth people and efficient prevention and determination of tax disputes.

A complete of 110 UN Member States voted in favor of the phrases of reference for a brand new treaty, with 44 abstentions and solely eight nations voting in opposition to it, together with the UK. 

TJN has accused the UK of double standards as the country has strengthened its own defenses in opposition to world company tax avoidance up to now few years, whereas voting in opposition to the UN treaty. 

Different nations that opposed the UN initiative had been the U.S., Australia, Canada, Israel, Japan, New Zealand and South Korea. 

In accordance with the TJN, the world will likely lose $4.8 trillion to tax havens over the subsequent 10 years if the OECD stays the world’s world tax regulator. The UN tax conference is the world’s greatest shot to avert this loss, the TJN spokesperson stated. 

The OECD is presently pushing its personal coverage aimed toward higher addressing tax avoidance — a global minimum tax deal that might impose a minimal efficient charge of 15% on massive multinational companies. 

The Company Tax Haven Index has been cited by the European Parliament and the European Commission, together with worldwide organizations such because the UN Human Rights Council and Oxfam.

Nevertheless, tax specialists similar to Niels Johannesen, director on the Oxford College Centre for Enterprise Taxation, disagree that the index is an correct measure for tax avoidance.

Johannesen informed CNBC that whereas TJN’s analysis is dependable for figuring out which nations apply which authorized measures in opposition to worldwide tax avoidance, he doubts the index is credible in measuring how a lot tax avoidance a jurisdiction facilitates.

“A extra significant metric is the place the shifted income of [multinational corporations] are booked. The very best tutorial research with this focus level to Bermuda and the Caribbean jurisdictions as essential however estimate that Eire, for example, receives extra shifted income than the three of them collectively,” he stated.

In the meantime, Leopoldo Parada, affiliate professor in tax legislation and co-director on the Centre for Enterprise Legislation and Observe on the College of Leeds, takes situation with the inclusion and framing of TJN’s haven rating indicators similar to lowest obtainable company revenue tax.

“All nations are utilizing totally different instruments to compete to draw funding. Some have infrastructure, others higher tech or low-cost labor … nations which have much less aggressive benefits in a few of these areas have a tendency to supply different choices, together with very low company revenue tax charges and different elements of the tax system,” Parada stated.

“It is not simply because a rustic has a really low company revenue tax charge that we robotically ought to think about {that a} nation is open for tax evasion … that nation is just keen to pay the commerce off.”