Overseas UK territories are the ‘biggest enablers of corporate tax abuse,’ tax advocacy group says

British overseas territories are the world's apical enablers of firm taxation abuse, according to a ranking by taxation advocacy radical Tax Justice Network. 

The British Virgin Islands is the territory "most complicit" successful helping multinational corporations underpay firm income tax, followed by the Cayman Islands and Bermuda, according to the latest update to TJN's Corporate Tax Haven Index earlier this month. 

"The UK and its web of British taxation havens, often referred to arsenic the UK's 'second empire,' are present liable for a 3rd (33%) of each firm taxation maltreatment risks measured by the index," a spokesperson for TJN told CNBC. 

Switzerland ranked fig four, followed by Singapore, Hong Kong and the Netherlands. Number 8 connected the database is the self-governing dependency of the United Kingdom, Jersey, portion the UK itself came successful astatine fig 18. 

TJN estimates that the UK and its British taxation havens outgo different countries an estimated $84 cardinal successful firm taxes annually.

Defending themselves against the charges made by the advocacy group, spokespersons from immoderate of the governments said they were successful afloat compliance with planetary taxation standards acceptable by the Organisation for Economic Co-operation and Development. 

The British government's Foreign, Commonwealth and Development Office told CNBC that the UK has been abiding by the Common Reporting Standard approved by the OECD successful 2014. 

CRS is designed to summation transparency astir taxation matters connected a planetary standard and let taxation authorities to uncover income and assets held overseas by their taxpayers. 

FCDO told CNBC it had much than 100 countries sharing CRS accusation with them, with implicit 9.2 cardinal accounts reported successful total, arsenic of the extremity of 2022.

The bureau added that the Crown Dependencies and Overseas Territories were abstracted jurisdictions with their ain democratically elected governments liable for their fiscal affairs.

A spokesperson for BVI Finance, which describes itself arsenic "the dependable of the British Virgin Islands' fiscal services industry," told CNBC that the territory adheres to planetary standards, participates successful planetary taxation transparency initiatives nether the OECD, and afloat cooperates with the UK Government and instrumentality enforcement agencies successful sharing "relevant" information.

Government taxation departments of the Cayman Islands and Bermuda did not respond to CNBC inquiries. 

Based connected the OECD standards for identifying and isolating countries that alteration multinational corporations to maltreatment tax, the British Virgin Islands, the Cayman Islands and Bermuda, are presently rated arsenic "not harmful."

TJN, which finds standards specified arsenic the CRS as insufficient to woody with tax avoidance and fraud, has endorsed efforts by the United Nations to instrumentality implicit regularisation of planetary taxation policy. 

In August, the UN unveiled a blueprint to make a cosmopolitan taxation accord for inclusive and effectual planetary taxation cooperation.

Broad commitments successful the guidelines see equitable taxation of multinational enterprises, addressing taxation evasion and avoidance by high-net-worth individuals and effectual prevention and solution of taxation disputes.

A full of 110 UN Member States voted successful favor of the presumption of notation for a caller treaty, with 44 abstentions and lone 8 nations voting against it, including the UK. 

TJN has accused the UK of treble standards arsenic the state has strengthened its ain defenses against planetary firm taxation avoidance successful the past fewer years, portion voting against the UN treaty. 

Other nations that opposed the UN inaugural were the U.S., Australia, Canada, Israel, Japan, New Zealand and South Korea. 

According to the TJN, the satellite will apt lose $4.8 trillion to taxation havens implicit the adjacent 10 years if the OECD remains the world's planetary taxation regulator. The UN taxation normal is the world's champion changeable to avert this loss, the TJN spokesperson said. 

The OECD is presently pushing its ain argumentation aimed astatine amended addressing taxation avoidance — a global minimum tax woody that would enforce a minimum effectual complaint of 15% connected ample multinational corporations. 

To find its rankings, TJN evaluated a country's taxation laws based connected 18 indicators, including minimum firm taxation rate, taxation exemptions and however assertive a country's taxation treaties are toward different countries.

This is the country's "Haven Score," and is meant to measure however overmuch "wiggle room" determination is for firm taxation abuse. The British Virgin Islands, Cayman Islands and Bermuda received the worst scores crossed each 18 indicators.

TJN past measured however overmuch fiscal enactment is conducted by multinational corporations entering and exiting the country. 

"This means the scale ranks firm taxation havens by however harmful they are to different countries successful practice, not conscionable successful theory," the TJN spokesperson said. 

The Corporate Tax Haven Index has been cited by the European Parliament and the European Commission, on with planetary organizations specified arsenic the UN Human Rights Council and Oxfam.

However, taxation experts specified arsenic Niels Johannesen, manager astatine the Oxford University Centre for Business Taxation, disagree that the scale is an close measurement for taxation avoidance.

Johannesen told CNBC that portion TJN's probe is reliable for determining which countries use which ineligible measures against planetary taxation avoidance, helium doubts the scale is credible successful measuring however overmuch taxation avoidance a jurisdiction facilitates.

"A much meaningful metric is wherever the shifted profits of [multinational corporations] are booked. The champion world studies with this absorption constituent to Bermuda and the Caribbean jurisdictions arsenic important but estimation that Ireland, for instance, receives much shifted profits than the 3 of them together," helium said.

Meanwhile, Leopoldo Parada, subordinate prof successful taxation instrumentality and co-director astatine the Centre for Business Law and Practice astatine the University of Leeds, takes contented with the inclusion and framing of TJN's haven people indicators specified arsenic lowest disposable firm income tax.

"All countries are utilizing antithetic tools to vie to pull investment. Some person infrastructure, others amended tech oregon inexpensive labour ... countries that person little competitory advantages successful immoderate of those areas thin to connection different options, including precise debased firm income taxation rates and different aspects of the taxation system," Parada said.

"It's not conscionable due to the fact that a state has a precise debased firm income taxation complaint that we automatically should see that a state is unfastened for taxation evasion ... that state is simply consenting to wage the commercialized off."