Oxfam attacks banks’ offshore profits
International charity Oxfam has singled out Bermuda’s HSBC in a major report on the use of tax havens by the top 20 European banks.
The Oxfam report said that 26 per cent of profits generated by the top 20 banks in the EU were made offshore — although these countries accounted for only 12 per cent of total turnover and seven per cent of staff.
And it claimed Bermuda as the home of nearly $591 million in profits for the Euro top 20 in 2015, compared to $205 million in the Caymans, $21.7 million in the British Virgin Islands and $206 million in the Bahamas.
But, later in the same report, it said that Bermuda had profits of $104 million — a massive $487 million difference.
Of the $104 million, the report attributed nearly $86 million in profit to HSBC Bermuda.
UK-based HSBC is the only European bank among the four with a physical presence on the island, while Oxfam records French multinational Société Générale as generating profits in Bermuda but with no physical presence.
Economist Peter Everson pointed out that HSBC did not set up in Bermuda on its own — it bought the “flourishing” Bermuda-based former Bank of Bermuda and “that everybody in Bermuda recognises that”.
He added: “We’re not in international banking — it’s insurance, reinsurance and captive insurance banking.
“We don’t have room for international banking. That’s why we don’t have international banking here.”
Bermuda appears again in the 52-page report — listed among “selected small tax havens and bank activity” for 2015.
The report listed 2015 Bermuda figures for European-based banks as a turnover of nearly $309 million, profits of $104 million, a total of 618 staff and no taxes.
It added that the average productivity of employees was nearly $174,000 each, with profitability of 34 per cent.
But the report, while mentioning the island’s small population, apparently ignored the massive amount of insurance and reinsurance activity in Bermuda.
And it highlighted Bermuda alongside other smaller countries in a table of “characteristics of selected small tax havens and bank activity” for 2015.
The report listed Bermuda’s share of the profits of the European top 20 as $104.3 million of the total $1.67 million, alongside the Caymans, Monaco and Jersey, Guernsey and the Isle of Man, with the last three grouped together.
The Oxfam report said: “One common feature of tax havens is that they provide a lower effective rate of taxation or even a zero corporate tax rate, making it possible for companies to avoid paying any taxes at all.
“Despite the limitations of the information provided ... for measuring the effective tax rate, it does reveal that these European banks have not paid a single euro of tax on $416 million of profits made in seven of these smaller countries.”
The report said that the data highlighted “a number of tax havens that play a clear role in banks’ business”.
And it added: “It underlines once more the role that these countries are playing in the haemorrhaging of global tax resources by competing against each other to offer ever more favourable tax regimes to global corporations.
“While banks are taking advantage of this global race to the bottom, the losers are often the poor, who experience the consequences of the inadequate public spending as a result of the lower tax revenues for the government.
“Only a fundamental paradigm shift on corporate tax and significant international and European tax reforms will help to put an end to this harmful global race to the bottom.”