A third of global tax dodging is enabled by the UK and British Overseas Territories

Every year an estimated £388 billion that should have been paid in tax disappears into tax havens.

Two thirds (£274 billion) of this is giant multinational corporations shifting their profits offshore to avoid tax. The rest is wealthy individuals evading tax. This is according to our friends at Tax Justice Network.

This is a global problem, depriving states and their citizens of money needed for hospitals, schools and other public services – while the rich and powerful line their pockets.

Where is the money going? 

Tax dodging is often about secrecy. Money flows to places that lack transparency – places where you don’t have to declare where the money came from.

Remember the £388 billion figure? (The total amount lost to tax havens globally every year.)

A staggering one third of that £388bn flows into, or through, or is enabled by Britain and its Overseas Territories – places like the British Virgin Islands and Bermuda – new research from our partners at Tax Justice Network shows.

Why? British Overseas territories act as secrecy jurisdictions because they don’t have strong financial reporting rules. You don’t have to declare where the money came from.

Transparency can end tax havens

We’ve campaigned hard for the UK government and the British Overseas Territories to introduce more transparency to their financial affairs.

We have been calling for the UK government and places like the British Virgin Islands and Bermuda to introduce public registers of beneficial ownership for years. These registers would show who owns the companies in their jurisdictions – and therefore who owns the money stashed in the companies.

The UK does have a register – the British Overseas Territories and Crown Dependencies should be in line with the rules we have in the UK.

So far, however, only Gibraltar and Montserrat – two out of the 14 Crown Dependencies and Overseas Territories  – have introduced a publicly accessible register of company ownership as agreed.

At the Foreign Office

This is why our partners, the JustMoney Movement, were at the Foreign Office in London today.

Inside, leaders from the British Overseas Territories met with the UK government

Outside, the JustMoney Movement awarded the British Virgin Islands, Cayman Islands and Bermuda medals as the largest enablers of corporate tax abuse.

The special prize went to the UK government for not taking action on this:

Earlier this year David Lammy gave a speech saying the UK must ‘go further and faster’ in tackling global corruption and tax abuse.

However little action has been taken by the new government so far.

Letter to the Chancellor and the Foreign Secretary

With Tax Justice Africa we wrote to Rachel Reeves and David Lammy this week, urging the government to take action.

We asked them to introduce a new deadline for the implementation of public registers of beneficial ownership in places like the British Virgin Islands by the end of the year.

We also urged the UK government to support the formation of a UN Tax Convention – a potentially powerful international body to monitor tax evasion and coordinate international tax reform.