UK is 'biggest tax haven in EU,' says global tax expert

(Reuters / Neil Hall)
British Overseas Territories and Crown Dependencies make up almost 25 percent of the world’s tax havens blacklisted by the European Commission.

The Commission published its blacklist on Wednesday as part of its Action Plan for Fair and Efficient Corporate Taxation.

The Action Plan sets out a series of policies to “tackle tax avoidance, secure sustainable revenues and strengthen the Single Market for businesses.”

It also outlines key strategies for ensuring “fair but growth friendly taxation” and tackling financial secrecy commonly associated with tax dodging.

Tax havens featured on the EC’s blacklist include Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Montserrat and the Turks and Caicos Islands.

Each is inextricably linked to Europe’s financial hub, the City of London.

Global tax expert Richard Murphy said the EC’s blacklist shows the UK and its territories are “by far the biggest tax haven in the EU.”

Murphy, a vocal campaigner for tax justice, said each of the territories referenced on the Commission’s blacklist are “branch offices of the City of London.” He argued they are undeniably linked to the London-based financial mecca.

Although some commentators say Britain’s Overseas Territories and Crown Dependencies are autonomous of the UK, Murphy dismissed this viewpoint as “nonsense.”

“They are British territories with constitutions that are Statutory Instruments of Parliament here in UK,” he wrote in his Tax Research blog.

This fact, Murphy said, makes them “as independent as Norfolk.”

Following the launch of the EC's Action Plan on Wednesday, Vice Present Valdis Dombrovskis described it as an initiative for “fairer and more growth-friendly taxation in the EU.”

“It rests on the core principle that all companies – big or small, local or global – must pay a fair share of tax where real economic activity is taking place and where their profits are actually made,” he said.

Core policies tabled in the plan include a plot to relaunch the Common Consolidated Corporate Tax Base (CCTB) and a framework to put “effective taxation” in place where “profits are generated.”

The Commission described its blacklist, which heavily features overseas UK territories, as the first pan-EU list of “third-country non-cooperative tax jurisdictions.” It said it will put in place a “public consultation” to determine whether firms operating in the EU should be compelled to publicly declare tax information.

Writing in his Tax Research blog on Wednesday, Murphy expressed doubt over the relaunch of the CCTB. Previously rejected by a group of EU member states, he predicted the initiative will prove fruitless.

Murphy said the CCTB has merit in principle, but would not be consolidated in practice. He said the EC’s decision to temporarily drop the consolidation dimension of the project “makes the whole effort meaningless.”