The world’s top three tax havens are British territories – new research

New research shows that the world’s top three corporate tax havens are all British Overseas Territories.

That’s the grim finding of a new report from our allies Tax Justice Network.

The British Virgin Islands (BVI), the Cayman Islands and Bermuda came top in the new ranking of corporate tax havens.

Tax Justice Network estimates $84 billion of global corporate tax revenue is lost as a result of the British tax havens and the UK every single year.

However, it’s hard to know exactly how much money is being avoided in tax as it flows through these places. Secrecy and opaqueness are the name of the game to tax havens.

The UK is responsible for this

The UK government holds a share of responsibility for this lack of financial transparency.

British Overseas Territories – such as the BVI, the Cayman Islands and Bermuda – are subject to UK law in certain circumstances.

One example can be found in the 2018 Sanctions and Anti-Money Laundering Act.

Our government must act

The Sanctions and Anti-Money Laundering Act requires the UK government to support the Overseas Territories to implement public registers of company ownership.

Public registers of company ownership tell us which people own or control assets such as shell companies. Having this information is crucial to tackle tax dodging, money laundering and other financial criminality.

So far, however, successive governments have failed to make good on the requirements of the Sanctions and Anti-Money Laundering Act.

The new government has the opportunity to take a different path and make progress on company transparency in Overseas Territories like the BVI, Cayman Islands and Bermuda.

The UK government must set out clear expectations for the BVI and other Overseas Territories to adopt the same transparency measures as the UK itself has.

Additionally, Keir Starmer’s administration should go one step further and support global efforts to take action against tax havens – by supporting the UN Tax Convention.

Labour’s tax plans under threat?

In a few weeks Rachel Reeves, the Chancellor, will deliver her first Budget.

This is a hugely important moment – it’s when the new government will set out its tax and spending priorities for the next four years.

What will be announced is unclear, but hotly debated. Rumours and predictions swirl in the press. Amid this noise, we’ve noticed a worrying trend.

There is a drip, drip, drip of news stories that suggest Reeves may be planning to backtrack on some of the progressive tax reforms Labour promised in its election manifesto.

The BBC has reported that the government is reconsidering abolishing non-dom status loopholes.

Meanwhile, a paywalled article in the Financial Times suggests the Chancellor may compromise on closing a loophole that would ensure that private equity bosses pay the same tax rates as other workers.

Under pressure

There’s a risk that the government’s resolve to create a fairer tax system may be coming under pressure from aggressive lobbying from lobby groups. Groups representing the super rich and other powerful interests who are keen to maintain the status quo that benefits them.

However, it is also a sign of the progress we have made as a tax justice movement that the lobby groups representing the super-rich are mobilising their resources: they are feeling threatened.

It is our job to keep up the pressure – to keep making the case for a fair tax system.

With your help we will continue pushing the government to introduce progressive tax reforms – and push them to go much further by taxing wealth more.

I was on LBC over the weekend making the case for the Chancellor to tax income from wealth the same as income from work, for example.

There’s always a swirl of rumours before any Budget. We’ll keep up the pressure on the government to stay the course on their tax reform plans. And we’ll keep you in the loop.