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Bermuda named world’s worst tax haven - Oxfam

12th Dec 2016

Four UK-linked territories - Bermuda, the Cayman Islands, Jersey and the British Virgin Islands - appear in a new list of the world's 15 worst corporate tax havens revealed by Oxfam today.

The 15 countries earned their place on the 'world's worst' list because they have adopted an aggressive set of policies to enable companies to minimise their tax bills. 

Oxfam analysed key practices such as offering unfair and unproductive tax incentives and zero or extremely low corporate tax rates, as well as failure to cooperate with international processes to combat tax avoidance including measures to increase financial transparency. 

The 'Tax Battles' report highlights how tax havens help to facilitate tax dodging that robs countries around the world of vital revenue that could be used to fight poverty. In May more than 300 top economists, including Cambridge University professor Ha-Joon Chang, warned there is no economic justification for tax havens and urged world leaders to take on the powerful vested interests that benefit from the status quo.

Oxfam's Head of Inequality Ana Arendar said: "As long as tax havens are able to help rich clients and big businesses avoid paying their fair share, those who can least afford it are left picking up the tab. Tax dodging isn't an abstract accounting game - the lost revenue has devastating consequences for the world's poorest people who miss out on life-saving medicines and the chance to go to school."  

"Allowing our Overseas Territories and Crown Dependencies to operate as tax havens undermines Britain's efforts to be an outward-facing, responsible member of the international community. It's time to end this embarrassing contradiction in our own backyard."

In October the Prime Minister pledged to 'come after' the accountants, financial advisers and middlemen who help tax dodgers avoid paying what they owe to society. Oxfam warns that until the Government puts its offshore house in order the UK risks losing credibility as a global force for good, and at worst becoming a passive bystander in international affairs.

The UN estimates that tax dodging by multinationals costs poor countries at least $100 billion every year. This money could ensure that the 124 million children currently not in school get an education and provide healthcare that could save the lives of six million children a year. Corporate tax revenue is doubly important as a proportion of total tax revenue in poor countries as in rich ones. 

Oxfam warns that by allowing anonymous shell companies, offering unproductive tax incentives and very low corporate tax rates, tax havens are distorting the global economy and depriving other governments of much-needed resources. 

The pressure to compete by offering tax incentives to multinationals costs developing countries $138 billion annually. At the same time, slashing corporate tax rates sees governments balance their books by reducing public spending or by raising taxes such as VAT that fall disproportionately on the poorest. 

Oxfam is calling for governments to work together to improve financial transparency so it is clear how much tax companies pay in all countries, to end unproductive tax incentives and to set corporate tax at a fair level that contributes to the collective good. 

Ends

For a copy of the methodology and 'Tax Battles' report please contact: Melanie Kramers, mkramers1@oxfam.org.uk, +44(0)7825 088894. 

Oxfam tax experts available for interview.

Notes to editors

1. The 15 worst tax havens identified by Oxfam: (1) Bermuda (2) Cayman Islands (3) the Netherlands (4) Switzerland (5) Singapore (6) Ireland (7) Luxembourg (8) Curaçao (9) Hong Kong (10) Cyprus (11) Bahamas (12) Jersey (13) Barbados, (14) Mauritius and (15) British Virgin Islands. 

2. The LuxLeaks whistleblowers' appeal trial begins in Luxembourg on Monday 12 December. Antoine Deltour and his co-defendants exposed tax deals negotiated by Luxembourg tax authorities that enabled multinational companies to dodge millions of dollars in taxes. Oxfam is calling for whistleblowers to be protected, not prosecuted.

3. Top economists say tax havens have no economic justification: http://www.oxfam.org.uk/media-centre/press-releases/2016/05/300-economists-tell-world-leaders-tax-havens-serve-no-useful-economic-purpose

4. The UN estimates the annual financing gap to achieve universal pre-primary, primary and secondary education is $39billion http://www.uis.unesco.org/Education/Pages/oosc-data-release-2015.aspx. There are 124 million children out of school.  http://www.uis.unesco.org/Education/Pages/oosc-data-release-2016.aspx

5. Healthcare costs from the Global Investment Framework for Women's and Children's Health paper: http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(13)62231-X.pdf 

6. Corporate tax as a proportion of revenue from UNCTAD World Investment Report 2015 http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf

7. ActionAid research on the impact of tax incentives on developing countries: http://actionaid.org/2013/07/tax-incentives-cost-138-billion

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