Tax havens used by UK’s top companies
There are various areas of UK tax legislation allowing loopholes for tax avoidance. Recently companies such as Google, Amazon and Starbucks have been criticised by the media for making use of this to legally reduce corporate tax bills.
Further research by the charity ActionAid into the full extent of tax evasion has shown that
from the 100 biggest public companies in the UK there are over 8,000 subsidiaries or joint ventures in onshore and offshore tax havens. Only two out of the hundred companies on the UK FTSE list had no subsidiaries in tax havens.
At the UK chaired G8 summit David Cameron announced that tax avoidance is an issue that needs urgent attention. However, taking action on this subject is a huge challenge considering that 1,685 subsidiaries in UK Crown dependency locations such as Bermuda, Gibraltar and Jersey are used by FTSE 100 companies.
Onshore tax havens are also used prolifically. Delaware in the USA and the Republic of Ireland are renowned for their low taxes and lightly regulated business environment. The EU has been continually leaning on the Republic of Ireland for a reform of their tax haven policies.
Of the top ten users of tax havens, four of the UK’s biggest banks are up there, including Barclays, Lloyds TSB, HSBC, and the Royal Bank of Scotland. Major retailers and food manufacturers also made it to the top section of the list, demonstrating the widespread the use of tax havens across all sectors of business.
The extensive nature of onshore and offshore tax haven use poses a huge challenge when it comes to making preventative changes. Changes are undoubtedly needed but when they will be implemented and how effective they will be remains to be seen. Until then, the loopholes that are available enable legal tax evasion.
